How much car can you afford?

Contents - Index - Previous

How much car can you afford?
(This is a premium feature)

In this example, we have a monthly budget of $400 for car expenses. Miscellaneous expenses (e.g. insurance, gas, etc. )amount to $70/month, leaving us with $330 per month for the car loan. Because this is money we are paying out, give it a negative sign. The interest rate is 9% annually, calculated monthly. The term will be 5 years. The future value will be zero (we will owe nothing at the end of the loan). We calculate PV to be $15,897. This, plus any trade-in value, is what you can afford to pay for the new car.

Store:

Interest .09 / 12 = .0075
FV 0
Pmt 400 - 70 * -1 = -330
N 5 * 12 = 60

Calculate

PV 15,897

PV has a positive sign because we receive this money today (in the form of the car).

If we reduce the interest rate by 2%, we can afford a $16,675 car.

With the current release of ActiCalc, all financial calculations assume payments are applied and interest calculated at the end of the period.

See more examples.