I need some math help.

We have never had a car loan. Our car his dead. Fortunately my parents are on vacation and we're borrowing their car so we're not in a huge rush.

We don't have enough in the sinking fund to buy a car outright so we're going to have to borrow (which we hate) but we only have the one car and we need it.

I can't find an online calculator that can tell me how much we can / should borrow based on our salary.

Any advice?

(I've heard that the total value of your cars in total value should never exceed 1/2 your take home salary and we are trying to stick with that.)

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I don't have an answer to your question, BUT my advice is to start shopping loans with your local banks and credit unions. They will quickly tell you how much loan you can qualify to take, then simply take a loan that is much less -

Auto loans are slightly different than other kinds of personal debt because they are considered 'secured' by the car itself.

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"I've been rich and I've been poor but independently wealthy is where it is at."

I don't know either but. I used Auto loan Calculators and what I wanted as a payment as a Guide. Also you need to look at what cars fit your families needs. For us it made no since to get a small compact with a growing family.

The big plus is if you have good credit there are some awesome financing deals. I was able to get a fixed 5.25% this summer.

We were looking in the 12k-15K price range for what we wanted (Used Subaru Forester) the payments are around 250 a month. The car holds its value well so we didn't have to worry about gap coverage.

For us thats 8% of our monthly income. I wouldn't go above 10% but thats just me personally

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Kimberly Proud Mommy to Bethany Rose April 2006 &

Organizer of the Coupon Clippers of Tacoma

I would just calculate the monthly payment and see how much you can afford in your budget.

I agree with shopping around for interest rates at credit unions.... That would end up saving you a bundle.

Here's this calculator from bankrate: Auto loan calculator, car loan payment calculator by Bankrate

I don't know if you are going to be going through a dealership or what, but if you are, I just read an article that said to never ever tell them the highest you can afford as a monthly payment. I'm sure that's common sense to some people, but I found it useful. hth!

I've read that the car payments, insurance and maintenance should not exceed 30% of your monthly pay. I personally think that is too much of a percentage, but I guess it really depends on your budget.

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A woman is like a teabag. You never know how strong she is until she gets into hot water.-Eleanor Roosevelt

I'm sorry to sound nosy, but is the problem with the car completely unfixable? I know some people have put new engines in older cars and it's saved them a lot of money. I'm not sure what kind of car you have or what the problem is, but I thought I'd put that out there as a suggestion.

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"Anybody who believes the pen is mightier than the sword hasn't been inside a maximum security prison." ~ Lisa Scottoline

With my very limited understanding of the problem, it is burning oil and won't pass the emissions test without thousands of dollars worth of work. It's only valued at $500 right now with kelly blue book because so much else is broken on it (air conditioning etc) so we don't know how much more money to put into it. They are trying something else today (it is still in the shop) where they are soaking all the gaskets and spark plugs or something overnight and seeing if it can buy us until March - our next scheduled emission test. We just have to add more oil every time we fill it up. So, we just put $500 more into it (what it's worth) but I'm not sure it's worth putting thousands into a 9 yr old car. Perhaps it is. We need to find someone who knows something about cars ~ someone who isn't trying to sell us one!

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Instead of focusing on the monthly payment, look how long you really want to be paying for it. I know that some auto loans are for over 5 years, making monthly payments really low - but will the car still be working in 5 years? My best advice is to make it a goal to pay off the car in a short period of time (3 years or less) and then figure out how much of a monthly payment your budget allows. Then, you'll be able to work backwards and see how much you can pay for the car.

For example, if you can afford an extra $300 per month for a payment with a 7% rate, you can afford about a $10,000 car with a 36-month loan. If you stretch that to a five year loan, it's a $15,000 car. Here's a tool you can use:
Auto Loan and Car Finance Calculator

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Funny, I was thinking the same thing - I wanted it paid off in 3 years. The calculator helped me figure out if I want no more than a $200 payment, the credit union will give us a 6% loan over 36 months .....

Or the car dealership will give us an interest rate of 2.9% - but what's the catch?!?! Should we go for the lower one or am I missing something?

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