Calculating your car price you can afford is straightforward once you know the Car Affordability formula and what each input means. This guide explains the method in plain language, walks through a manual calculation, and gives worked examples you can follow — then you can do it instantly with the Car Affordability Calculator.
What is Car Affordability?
The Car Affordability calculation tells you your car price you can afford from a few simple inputs. The figure you are solving for here is the car price you can afford, expressed in INR.
The Car Affordability formula
The core formula is:
Car price you can afford = Monthly payment budget × (1 - pow(1 + Loan interest rate ÷ 100 ÷ 12, -(Loan tenure × 12))) ÷ (Loan interest rate ÷ 100 ÷ 12) + Down paymentHere is what each input means:
- Monthly payment budget — a money amount. Example: ₹20,000.
- Loan interest rate — a percentage, such as an annual rate. Example: 9%.
- Loan tenure — a value you set on the slider. Example: 5 years.
- Down payment — a money amount. Example: ₹2,00,000.
How to calculate it step by step
- Write down the monthly payment budget (for example, ₹20,000).
- Write down the loan interest rate (for example, 9%).
- Note the loan tenure (for example, 5 years).
- Write down the down payment (for example, ₹2,00,000).
- Apply the formula above to get your car price you can afford.
- Double-check the result with the Car Affordability Calculator.
Worked examples
Example 1
| Input / Output | Value |
|---|---|
| Monthly payment budget | ₹20,000 |
| Loan interest rate | 9% |
| Loan tenure | 5 years |
| Down payment | ₹2,00,000 |
| Car price you can afford | ₹11,63,467 |
| Loan amount | ₹9,63,467 |
With monthly payment budget of ₹20,000, loan interest rate of 9%, loan tenure of 5 years and down payment of ₹2,00,000, the car price you can afford works out to ₹11,63,467.
Example 2
With monthly payment budget of ₹40,000, loan interest rate of 9%, loan tenure of 5 years and down payment of ₹2,00,000, the car price you can afford works out to ₹21,26,935.
| Result | Value |
|---|---|
| Car price you can afford | ₹21,26,935 |
| Loan amount | ₹19,26,935 |
Example 3
With monthly payment budget of ₹10,000, loan interest rate of 9%, loan tenure of 5 years and down payment of ₹2,00,000, the car price you can afford works out to ₹6,81,734.
| Result | Value |
|---|---|
| Car price you can afford | ₹6,81,734 |
| Loan amount | ₹4,81,734 |
Tips for an accurate result
- Keep your units consistent — mixing, say, months with years or grams with kilograms is the most common source of error.
- Round only at the very end. Rounding inputs early can shift the final answer noticeably.
- Re-run the numbers whenever an input changes, rather than estimating from an old result.
- Annual rates must be converted to the period you are calculating for (for example, divide an annual rate by 12 for a monthly figure).
Prefer not to do the maths by hand? — the Car Affordability Calculator does it instantly, for free, with the formula and a worked example built in.
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