Loan Affordability Calculator Calculator
Estimates only. Results from this calculator are approximate and should not be used as financial advice. Actual figures may vary.See our methodology and data sources.
Frequently Asked Questions
What is debt-to-income ratio and why does it matter?
Debt-to-income (DTI) ratio is your total monthly debt payments divided by your gross monthly income, expressed as a percentage. Lenders use DTI to assess your ability to repay loans. Most lenders require DTI below 43%, while financial advisors recommend keeping it below 36% for financial health.
How much should my car payment be relative to my income?
A common guideline is keeping car payments to 10-15% of your gross monthly income. Additionally, your total debt-to-income ratio (including the car payment) should stay below 36% for optimal financial health, though lenders may approve up to 43%.
Can I afford a car loan if I have existing debt?
Yes, but it depends on your debt-to-income ratio. If your current DTI is below 20%, you have room for a car loan. If it's already above 30%, you should be cautious. Calculate your new DTI including the car payment to ensure it stays below 36-43%.
How does loan term affect affordability?
Longer loan terms (72-84 months) lower monthly payments, making loans appear more affordable, but they increase total interest costs and keep you in debt longer. Shorter terms (36-60 months) have higher payments but save money overall and build equity faster.
