How to Calculate Percentage in Payment When Buying a Car

When you purchase a car the amount of the payment is important. Some people will give more consideration to the amount of their monthly payment than to the loan total or interest rate. If they can afford the payment then everything else is "OK." You can calculate the percentage of your monthly payment in relation to your monthly income by following a few steps. Make sure your monthly payment fits comfortably into your budget.

Instructions

1

Find out the amount of your monthly payment. Get an auto loan calculator to determine how much your monthly payment will be. For example if you have an auto loan for 72 months, in the amount of $20,000 with an interest rate of 8 percent you can calculate your payment using an online auto calculator.

2

Enter the terms of your loan into the calculator. When all of the terms and conditions have been entered into the auto loan calculator hit the "calculate" button to see what your monthly auto loan payment will be. In the example the payment will be $350.66.

3

Determine your monthly gross income. Gross income is the amount you receive before any taxes are deducted. If you make $15 per hour, your monthly gross income is $2,598, ($15 x 8 hours x 5 days per week x 4.33 weeks per month).

4

Divide your monthly car payment by your gross income to determine the percent of your gross monthly income. Your car payment will be 13.49 percent of your gross monthly income, ($350.66 out of $2,598). All of your debt payments including your mortgage, credit cards, loans and other installments should not exceed 36 percent of your gross monthly income, according to Consumer Reports online.

5

Calculate 36 percent of your gross monthly income. $2598 x .36 = $935.28. Your other debts should not exceed $584.62 per month.