Car Affordability Calculator
Wondering how much car can I afford without straining your budget? This free calculator applies the well-known 20/4/10 rule — 20% down, a loan term of 4 years or less, and total car costs under 10% of your gross monthly income — to find the maximum car price that fits your finances, plus a month-by-month budget breakdown.
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Monthly budget breakdown
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20/4/10 checklist
Planning estimate — excludes maintenance, registration, and taxes. Not financial advice.
How to use this calculator
Start with your gross monthly income — that's your pay before taxes, divided by 12 if you think in yearly terms. Then enter the down payment you can put toward the car, including any trade-in value you expect.
Set your loan term (keep it at 48 months or less to follow the rule), the APR you've been quoted or expect, and realistic estimates for insurance and fuel per month. The calculator instantly shows the most expensive car you can buy while keeping every car cost under 10% of your income.
Try changing the down payment or loan term to see how they move your affordable price — the 20/4/10 checklist below the results tells you exactly which guideline you're meeting or breaking.
How it works
The 20/4/10 rule is a budgeting guideline with three parts: put at least 20% down so you're never underwater on the loan, finance for no more than 4 years (48 months) to limit interest costs, and keep all car spending — loan payment, insurance, and fuel — under 10% of your gross monthly income.
The calculator first computes your 10% budget (0.10 × gross monthly income), then subtracts your insurance and fuel estimates to find what remains for the loan payment. That payment is converted into a maximum loan amount using the standard loan amortization formula:
Loan = Payment × (1 − (1 + r)−n) / r, where r is the monthly interest rate (APR ÷ 1200) and n is the number of months. Your max affordable price is the loan amount plus your down payment.
Assumptions: insurance and fuel are entered as fixed monthly estimates; taxes, dealer fees, registration, and maintenance are not included; the APR stays fixed for the whole term. Results are estimates for planning, not financial advice.
Frequently asked questions
What is the 20/4/10 rule?
The 20/4/10 rule is a guideline for buying a car without overextending your budget: put at least 20% down, finance for no more than 4 years (48 months), and spend no more than 10% of your gross monthly income on all car-related costs, including the loan payment, insurance, and fuel.
How much car can I afford on a $75,000 salary?
With a $75,000 salary, your gross monthly income is $6,250, so the 20/4/10 rule allows up to $625 per month for all car costs — loan payment, insurance, and fuel combined. After subtracting your insurance and fuel estimates from that $625, whatever is left is the loan payment you can afford, which — plus your down payment — sets your maximum car price. Use the calculator above with your own numbers for an exact figure.
Should I include insurance in the 10% budget?
Yes. The 10% in the 20/4/10 rule covers every recurring car cost, not just the loan payment. Insurance and fuel are mandatory costs of owning the car, so counting only the loan payment would understate what the car really costs you each month.
Is a longer loan term bad?
Terms longer than 48 months usually mean a higher interest rate and much more total interest paid, and you stay "upside down" (owing more than the car is worth) for longer. Longer terms do let you afford a higher sticker price on paper, but at a much higher total cost.
Does the 20/4/10 rule work for used cars?
Yes — the rule works the same for new and used cars. It's often easier to follow with a used car because the lower price makes the 20% down payment smaller and the 4-year payoff more achievable. Just budget a little extra for potential maintenance on older vehicles.