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Car Affordability Calculator

Calculate how much car you can afford.

Using the popular 20/4/10 rule, enter your income to calculate a reasonable car budget: 20% down payment, 4-year loan max, and total transportation costs under 10% of gross income.

Enter a valid income.

Max Monthly Transportation Budget (10% Rule)

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Estimated Max Car Price (4-year loan, 20% down)

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How to Use This Tool

  1. Enter your gross monthly income.
  2. Adjust the estimated loan interest rate if you have a specific rate in mind.
  3. Click Calculate for your recommended transportation budget and max car price.

The 20/4/10 Rule

This popular car-buying guideline suggests:

Max Monthly Transportation Budget = Gross Monthly Income × 10%

Important: This Includes All Transportation Costs

The 10% figure is meant to cover your total transportation costs, not just the loan payment — insurance, fuel, and maintenance should all fit within that budget alongside your loan payment, so your actual affordable loan payment is somewhat less than the full 10%.

Why a Shorter Loan Term Matters

Limiting yourself to a 4-year loan (rather than the increasingly common 6-7 year terms) keeps total interest paid lower and reduces the risk of being "underwater" (owing more than the car is worth) due to depreciation.

Frequently Asked Questions

Does the 10% include insurance and gas, or just the loan payment?

The 10% guideline is meant to cover your total transportation costs — loan payment, insurance, fuel, and maintenance combined — not just the loan payment alone, so budget accordingly for the other costs within that limit.

Why does the rule recommend only a 4-year loan?

Shorter loan terms reduce total interest paid and lower the risk of owing more than the car is worth (being "underwater") as it depreciates, compared to increasingly common 6-7 year loan terms that can trap buyers in negative equity.

This calculator is provided for general informational and estimation purposes only. Results should not be treated as professional financial, tax, legal, medical, or engineering advice. Always verify critical calculations with a qualified professional or official source before making decisions.