Car Affordability Calculator

Find out how much car can you afford with our Car Affordability Calculator. Get your desired car that makes you happy without breaking your monthly budget.

As a customer you would like to have a car affordability calculator that helps you calculate:

  • Affordable EMI, if you opt for a car loan, OR
  • Affordable upfront Cash payment, if you don’t opt for a Car Loan

Autowagons car affordability calculator is designed in such a way that it can cater to both types of requirements.

Autowagons Car Affordability Calculator

Please note that this calculator does not take into consideration the existing savings that you may have. So if you intend to use it as a downpayment for a car loan, just add it to the “Estimated affordable car price” to know your Actual affordable car price.

If you have already decided what car to buy and need to estimate the EMI, then check out our Car Loan EMI Calculator now!

How does this calculator work?

  • (50-60) % of your Annual Discretionary income if paying in Cash upfront, or
  • (30-40) % of your Monthly Discretionary income if paying through EMI by availing Car Loan

Upfront Cash Payment

As a thumb rule, we take 50% to 60% of your Annual Discretionary income (i.e. Annual Take Home Salary minus Annual payments i.e. Expenses, investments, and other EMIs) as your overall car price, if you are planning to buy your car through upfront cash payment.

If we take an example of a person earning $2,000 and spending $1000 per month, his Monthly Discretionary Income would be $1000. That makes his Annual Discretionary income $12,000. Hence, as per Autowagons thumb rule, it is advisable for him to buy a car ranging between $6,000 – $7,200 (which is 50-60% of $6,000).

However, this person with a monthly discretionary income of $1,000 might still not be content if he desires to buy a well-equipped Honda City worth $20,000. He might think of alternatives like financing his car by taking a Car loan. So, what should be the EMI and tenure for buying this car?

Car Loan

Based on thorough research, we suggest that your EMI should be 30% to 40% of your Monthly Discretionary Income.

In continuation with the above example of a person having monthly discretionary income of $1,000, he can afford to pay $300-$400 as EMI for Car Loan.

If he considers paying EMI of $300 under the rate of interest of 8%, he can afford a higher priced car based on increasing tenure.

  • If tenure is 3 years, Principal Loan amount can be $9,574
  • If tenure is 5 years, Principal Loan amount can be $14,796
  • If tenure is 7.5 years, Principal Loan amount can be $20,254. This is what was needed!

But still, we believe that the importance of owning a car varies from person to person. Only you can decide which choice is right for you. Whether you’ll pay cash, take a loan or invest, it all depends on how important buying a car is to you compared to other expenses.

That is why it’s important to break the above thumb rule into three different life choices-

  • Some people want to own a car for occasional use.
  • Others want a reliable car that takes care of their routine activities.
  • And rest are car aficionados who are willing to pay any amount for the car they love.

To learn more check out our article on How much car can I afford?


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