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Car Affordability Calculator

You may be wondering, “How much should I spend on a car?” Credit Union of Southern California’s (CU SoCal) car loan monthly payment calculator can help estimate your monthly payment and determine how much car you can afford.

Knowing how much you can afford to spend on a car is essential to getting a good deal on the car you want at a price that won’t break your budget.

Plus, you can use the down payment option to see how different loan terms or down payments can impact your monthly payment. You can also view the complete amortization schedule by clicking the "View Report" button.

Try the CU SoCal Car Loan Payment Calculator now to see how much car you can afford!

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How Much Should I Spend on a Car?

As we explained in the blong article, “How to Finance a Car,” creating a budget months in advance or even a full year before you plan to buy a car makes good financial sense.

Start by making a list of your monthly expenses, which you then subtract from your monthly take-home income. What’s left after you do the math? Do you still have enough money to put into an emergency fund, save for retirement, or pay for that vacation you know you want to take?

The amount that’s left after your essential monthly expenses are accounted for is what you could feasibly afford to make as a car payment each month. Be sure to include money for car insurance in your budget. If your numbers come up short, then you need to consider delaying the purchase or saving more money for the down payment, which would reduce the total financed loan amount.

Financial expert Suze Orman offers car buyers this advice, “These days, more than 40% of car loans are for more than 60 months and nearly 30% are for more than 72 months. That lenders are doing this makes sense for their bottom line: They know you can’t really afford the car, so they just stretch out the loan terms to make it seem affordable. When your current car has reached the end of its days, your goal should be to buy a car that you can pay off in three or four years. Not five. Not six. And certainly not seven.”

While long-term car loans may reduce the amount of your monthly payment, in the long-run you’ll pay more in interest. The bottom line she says, “Aim to spend as little as possible for car that meets your needs.”

How Much Should My Car Payment Be?

When considering a car purchase, plan carefully by reviewing your budget and using the car affordability calculator. Missed payments can result in fees, damaged credit, even a repossession of the car by the lender.

To determine how much your monthly car payments should be, consider this formula from Experian, “Using the 50-30-20 rule can help you figure out exactly how much this amount should be. Once you've taken 50% of your post-tax income, subtract all your monthly bills, and what you're left with can be used as your transportation allowance.”

How Much Money Should I Put Down on a Car?

Putting more money down on your purchase reduces how much you owe and decreases the risk associated with your loan. As a result, making a sizeable down payment on the purchase could result in a lower interest rate.

Other Factors to Consider

Here are some other factors to consider that could impact your buying power:

Trade-In Value: Trading in your current vehicle to the dealership you plan to purchase from eliminates the hassle of trying to sell it yourself. Trading in your car means you'll probably pay less sales tax on the purchase of the new vehicle. In most states, the value of the trade-in vehicle is subtracted from the purchase price of the new car, so you will only be charged tax on the difference, which will be a smaller amount.

New Car Sales Tax: Sales tax adds a large chunk of money on top of what you will pay for your new car. The car loan experts at remind us that cities and counties frequently add their own tax on top of the state tax, so the amount you pay can vary within a state. The sales tax on vehicles sometimes varies from the state's usual sales tax rate.

Car Loan Interest Rate and Credit Score: The higher your credit score, the lower the interest rate you’ll be offered by the lender. And the lower your credit score, the higher the interest rate you’ll pay.
Car Loan Term: Term is the length of time the loan is in effect. If you choose a longer-term loan, your monthly payments will be less because the price you paid for the car is spread out over time. However, you’ll pay more interest as a result.

How to Budget and Save for a New Car

Saving for a car requires determination and a savings plan. Here are some tips, which are discussed in more detail in “How to Save Up Money for a Car.”
  1. Create a Timeline
  2. Decide on the Type of Car You Want
  3. Determine Your Down Payment Amount
  4. Calculate Your Monthly Payment
  5. Create a Budget
  6. Open a Savings Account
  7. Automate Your Savings
  8. Generate a second income source
  9. Sell or Trade-in Your Current Car
  10. Stick to the Plan

Why Savvy Consumers Choose CU SoCal

For over 60 years, Credit Union of Southern California has been proudly serving Southern California families. We are the fastest growing credit union in Southern California!

Apply For A CU SoCal Auto Loan Today!

At CU SoCal, we lend on character, not just on credit scores. If you’ve been turned down for an auto loan because of a low credit score, we can help! We listen to your story and look beyond your credit score today to offer the right auto loan that will help you become financially stronger tomorrow.

Please give us a call today at 866.287.6225 for an expert, no-obligation consultation or apply for a CU SoCal auto loan today!
Suze Orman
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Building Better Lives

Credit Union of Southern California (CU SoCal) is a leading financial institution empowering those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County to reach their goals and build strong financial futures. CU SoCal provides access to convenient money management services and offers competitive rates and flexible terms on auto loans, mortgages, and VISA credit cards—turning wishing and waiting into achieving and doing.


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