AM Modulator with BJT 2N3904
You are approaching the sensible modulation-depth limit for this simple type of amplitude modulator. If you looked at the signal on the collector (blue) you'd see what is happening with slightly more modulation (Vm = 5.5 volts peak) applied: -



The blue trace (voltage on the collector) is limiting on the troughs and this causes distortion on the bottom of the filtered signal. My sim does exaggerate this slightly because Vm = 5.5 volts peak but I do so to explain that you are are reaching the circuit limits for the modulation index i.e. this circuit cannot handle modulation indexes this big.