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Car Affordability Calculator

Enter your annual income and monthly expenses to instantly find out the maximum car price you can afford — based on the 20/4/10 rule used by financial experts.

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Track Your Car Expenses

After buying your car, track loan payments, insurance, gas, and maintenance in one place. Our free budget template keeps you on top of every dollar.

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What Is the 20/4/10 Rule for Car Buying?

The 20/4/10 rule is a guideline recommended by financial experts:

  • 20% down payment — reduces your loan amount and avoids being underwater on the loan.
  • 4-year (48-month) maximum loan term — shorter loans mean less interest paid.
  • 10% of gross income — your total car costs (payment + insurance + gas + maintenance) should not exceed 10% of your gross monthly income.

How to Lower Your Car Costs

  • Buy used (1-3 years old) — cars lose 20-30% of value in the first year alone.
  • Increase your down payment — even an extra $1,000 reduces monthly payments and total interest.
  • Improve your credit score — a 100-point increase can save 2-3% on your interest rate.
  • Shop multiple lenders — get pre-approved from banks and credit unions before visiting dealers.

Related Resources

Frequently Asked Questions

How much of my income should go to a car payment?

Financial experts recommend keeping your total car expenses (payment, insurance, gas, maintenance) under 10-15% of your gross monthly income. The car payment alone should ideally be under 8%.

Is a 72-month car loan a bad idea?

Longer loans mean lower monthly payments but significantly more interest paid. You also risk being "upside down" (owing more than the car is worth). Aim for 48-60 months maximum.

Should I lease or buy?

Leasing offers lower monthly payments but you never build equity. Buying is usually better long-term — especially if you plan to keep the car 5+ years. Leasing makes sense if you want a new car every 2-3 years and drive under 12,000 miles/year.