How Big of an Auto Loan Can I Afford?
This calculator helps you estimate the size of auto loan you can afford.
Automobile loans are one of the most prevalent forms of loans in our country. Over 70% of car purchases involve a loan, and this number jumps to almost 85% for new car sales.
Unfortunately, many auto purchasers are not properly assessing their ability to pay these loans. Auto loan payment delinquency is at its highest rate since the 2008 recession. In fact, 2.6% of car purchasers who took out an auto loan in the 1Q of 2014 have missed at least one loan payment in the last year. This is the highest delinquency rate since 2008, when it reached 3%.
One of the reasons for this rise in delinquency is the fact that dealers are offering longer-term loans (some across 6-7 years) to consumers with lower credit ratings. While these loans require lower monthly payments, they feature higher interest rates, and, of course, will take longer to pay off than shorter-term loans.
Part of the responsibility, however, needs to fall on the shoulders of car purchasers, who need to do a better job of properly assessing the amount of auto loan they can afford. The Auto Loan Calculator below will help car purchasers determine the size of loan that works with their budget.
Common Questions & Answers - Compliments of Consumer Financial Protection Bureau (Click for answers)