I created this online Loan Affordability Calculator in response to a request submitted by the owner of a small car dealership -- one that still does their own financing -- and who used to use a DOS program published by Andrew Tobias, called "Managing Your Money" (MYM, software that I still use to this day, but it only works on my old Mac iBook).
Unfortunately the car dealership upgraded their computer operating system and can no longer use MYM.
With his permission, here is an excerpt from the email I received from Patrick Walsh of Atwater Ford:
Then step the payments (as in $200/mo for 12 months, followed by $235/mo for 12 months, followed by $260 for 24 months, and finally $275/month for the final 12 months).
Or with the "baby" balloons, as in $200/mo for 60 months, with a baby balloon of $500 each june and each December.
OR one with $850 each September (one per year as opposed to two per year in the first example).
MYM's loan amortization would ask you to fill in 3 out of the 4 blanks (APR, rate, # of Payments, and payment $ amount) and it would compute the one that was left open.
MYM was a brilliant piece of software that was well ahead of its time. Unfortunately, according to the author, the software hasn't been sold at retail for years and his contract for it ended years before that.
But since I still use MYM (Macintosh version #7), I was able to create a web version of the "Loan Analysis" feature of the software that Patrick no longer has access to. I have actually used this MYM feature to help answer countless loan-related questions from site visitors over the years.
Suggested Uses for the Calculator
Here are a few of the many possible uses for the Loan Affordability Calculator.
How Much Can I Afford to Borrow?
To see how much loan you can afford based on the amount of the installment payments you can afford to make, enter the interest rate, the number of payments, and the payment amount you can afford. The calculator will then tell you the size of the loan (principal) those terms will equate to.
Step or Graduated Payments and "Baby" Balloons
This use of the calculator is the one that prompted Patrick to request the calculator. He can now use this calculator to help his small-town customers to purchase the reliable transportation they couldn't otherwise afford.
Patrick can now enter the principal, rate, and affordable payment amount to calculate the initial number of payments to pay off the loan. He can then use the customer's anticipated raises and lump sum receipts (tax refunds, seasonal income, etc.) to create a graduated payment plan -- with or without "baby" balloons.
Variable Rate Loans
If you are paying on an adjustable rate loan, you can enter the original terms and then enter up to 8 rate changes that have occurred in order to get an idea of what your current payoff amount is.
Early Loan Payoff
If you want to see how much time and interest you will save by increasing the payment amount, or prepaying a lump sum of principal, the calculator will give a side-by-side comparison of the original terms versus the modified terms.