Are you planning to buy a car but worried about whether you can afford it or get approved for a loan based on your financial situation? Don’t worry—we have built one of the most important and comprehensive Debt-to-Income (DTI) Ratio calculators specifically for checking car affordability. In this guide, we will cover:
The Debt-to-Income (DTI) Ratio is a financial measure that tells how much of your monthly gross income goes toward debt payments. Here’s how it’s calculated:
Formula:
DTI (%) = (Total Monthly Debt Payments / Gross Monthly Income) × 100
For instance, if you earn 5,000 dollars per month and pay 1500 dollars in debt, your debt-to-income ratio is 30%.
The Debt-to-Income Ratio Calculator is an online tool specifically designed to assess car affordability based on:
The calculator doesn’t just give you DTI ratios—it also provides key insights like:
6,000 dollars500 dollars01,200 dollars500 dollars100 dollars80 dollars5 years6%Brief Result:
36.67% → Below the 50% limit (✓ Good)8.33% → Well below the 15% guideline (✓ Good)11.33% → Below the 20% recommendation (✓ Good)1,300 dollars~25,862 dollarsThe calculator shows that this car is affordable. You would still have 3,620 dollars left after covering the new car payments and all other debts.
Calculating your debt-to-income ratio for a car loan is straightforward. Use the following formula:
DTI (%) = (Monthly Debt Payments + Proposed Car Payment) / Monthly Gross Income × 100
Below 36% is generally considered an excellent DTI, while 36% to 43% is acceptable. here is further breakdown of DTI levels:
ExcellentAcceptableRisky, but still consideredThe most commonly accepted maximum DTI ratio is 50%. This includes all your debts, including your new car payment.