This car affordability calculator uses the popular 20/4/10 rule to estimate how much car you can afford: put about 20% down, finance for no more than 4 years, and keep total car costs, including the payment, insurance and fuel, under 10% of your gross monthly income. Adjust any number to fit your situation.
- Total car budget per month $0
- Max loan payment $0
- Max loan amount $0
- Down payment share 0%
What Is the 20/4/10 Rule?
| Part | Meaning | Why it helps |
|---|---|---|
| 20 | Put at least 20% down (10% is a common target for used cars) | Smaller loan and less risk of owing more than the car is worth |
| 4 | Finance for 4 years (48 months) or less | Less total interest and faster equity |
| 10 | Keep total car costs under 10% of gross monthly income | Leaves room for savings and other bills |
The 10% covers everything: loan payment, insurance, fuel or charging, maintenance, and parking. It is a guideline, not a rule you must follow exactly; some budgets allow more, many allow less.
How the Calculator Works
- It takes 10% (or your chosen share) of your monthly gross income as your total car budget.
- It subtracts insurance, fuel and other running costs to find the largest loan payment you can take.
- It converts that payment into a maximum loan using your APR and term.
- It adds your down payment and trade-in and removes sales tax and fees to estimate the car price.
- It checks whether your down payment reaches 20% of that price.
Example
With a $75,000 salary, 10% of monthly gross income is about $625. After $150 for insurance and $150 for fuel, about $325 is left for the payment. At 7% APR for 48 months, that supports a loan of about $13,570. Adding a $5,000 down payment and allowing 6% for tax and fees gives an affordable price of roughly $17,500, with the down payment at about 28%.
Tips If the Result Is Lower Than You Hoped
- Get insurance quotes before you shop; premiums vary a lot by car.
- Consider a reliable used or certified pre-owned car.
- Save a larger down payment or sell your old car privately.
- Improve your credit to qualify for a lower APR.
- Avoid stretching the loan to 72 or 84 months just to fit a payment.
Related guides: read our first-time car buyer guide, learn how much to put down on a car, and compare leasing vs buying.
Car Affordability FAQ
How Much Car Can I Afford on My Salary?
Using the 20/4/10 rule, keep total car costs under about 10% of gross monthly income, finance for four years or less and put about 20% down. Use the calculator to turn that into a price.
What Is the 20/4/10 Rule for Buying a Car?
Put 20% down, finance for no more than four years, and keep total monthly car costs under 10% of your gross income.
Does the 10% Include Insurance and Gas?
Yes. The 10% is meant to cover the loan payment, insurance, fuel and other running costs.
Is the 20/4/10 Rule Realistic?
It is conservative. Many buyers adjust it, but it is a useful starting point to avoid overspending on a car.
Should I Use Gross or Net Income?
The 20/4/10 rule is based on gross monthly income, before taxes. Using take-home pay gives a more cautious budget.
What If I Cannot Put 20% Down?
You can still buy, but aim for the shortest loan you can afford and consider a less expensive car to limit negative equity.