How Much Car Loan

How much car can I afford?

Start with the basic math calculating your budget, your payment, your expected interest rate to get to your maximum loan amount. We recommend you use our auto loan calculator. Now you’re going to have to modify that number based on requirements of the specific lender. Consider the common auto loan stipulations below:

• Age of the car. While this typically affects the interest rate, it may also affect the maximum loan amount. One of our lenders, for example, will loan up to $20,000 on ’96 – ’98 vehicles but up to $75,000 on ’99 or newer vehicles. The cars mileage may also come into play here. If the car you are considering has more than 100,000 miles, your financing options decrease as few lenders are willing to lend on cars with high miles.

• Your credit score. Maximum advance. 760+ FICO scores they will lend up to 125% of MSRP or KBB Retail including tax, license, service contracts, gap, etc. For 610 – 659 FICO scores they will lend up to 100% of MSRP or KBB Retail. Click here for more on credit scores.

• Your gross monthly income (GMI). Getting an auto loan with GMI is below $1,500 is tough. Some of our Credit Unions partners go down to $1,400. Click here for more on credit union auto financing . Some dealers will also finance auto loans for borrowers with less than $1,500. Commonly called “Buy Here Pay Here” financing, this is where the dealer carries your promissory note. Click here for more on Buy-Here-Pay-Here financing. . At $1,800 / month most banks and dealers will move on to other areas of the application e.g., the type of collateral, etc. Above $2,000 / month options open up.

• Your payment to income ratio (PTI). Few banks will give you an auto loan with a monthly payment greater than 20% net monthly income. In fact, most auto lenders feel more comfortable at around the 15% PTI. So, if you make $2,000 per month and have

• Your level of debt as determined by your Debt-To-Income (DTI) ratio. These are commonly treated as minimums. A consumer’s DTI generally needs to be below 50%. The higher your credit score, the higher the allowable debt to income because you’ve proven your ability to manage your debt. If your credit score is below 660, the debt to income level may fall to 45% or less.

Related Links

• Ensure you get the right car. Research your car in advance.
  
• Ensure you get the right financing. Get auto loan quotes here.
  
• Get your best deal by knowing the language. Review common auto loan terms.
  

  Disclosure: We developed the content for SmartCarCredit™ while working with automotive industry clients. We hope you find it helpful in making informed decisions. While we believe the information to be accurate, we do not guarantee its accuracy.

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