5. To calculate how large an auto payment you can afford, multiply your monthly income by 0.36 (36% of income is the limit of what should be allocated to servicing all debt).

Then subtract your current monthly debt payments. The result is the maximum monthly auto (and insurance) payment you can afford. To calculate your affordable auto payment:

Total monthly income = ( ) × 0.36 =

Subtract debt including mortgage/rent payments −

Affordable Auto Payment =