20/4/10 Rule Calculator
Find out how much car you can afford using the 20/4/10 rule — 20% down, 4-year loan, 10% of gross income.
How the 20/4/10 Rule Works
Down Payment
Put at least 20% down to avoid being underwater on your loan
Loan Term
Finance for no more than 4 years to minimize interest
Of Gross Income
Keep total car costs under 10% of your monthly gross income
Understanding Your Results
This calculator applies the 20/4/10 rule to your income and shows three budget ranges:
- •Safe (20/4/10 Rule): Total car costs stay under 10% of gross income with a 20% down payment and 4-year loan — the recommended range
- •Stretch (15%): A moderate increase that may work if you have low expenses elsewhere
- •Lender Max (36% DTI): What banks typically approve — but spending this much on a car can strain your budget
20/4/10 Rule Example
Here's how the rule works for someone earning $60,000 per year ($5,000/month gross):
- Maximum monthly car expenses: $500 (10% of $5,000)
- After insurance ($150) and maintenance ($75): $275 left for your car payment
- With a 4-year loan at 6% APR and 20% down: You can afford roughly $13,000–$14,000
Want to learn more? Read our complete guide to the 20/4/10 rule.
Frequently Asked Questions
Is the 20/4/10 rule realistic?
Yes — it's designed to keep car ownership affordable without financial stress. While it may feel conservative, following it means you'll never be car-poor or underwater on your loan.
What if I can't put 20% down?
A smaller down payment increases your monthly costs and the risk of negative equity. Consider saving longer or looking at less expensive vehicles to stay within the rule.
Should I include insurance and maintenance in the 10%?
Yes. The 10% limit covers all vehicle expenses: loan payment, insurance, and maintenance. Our calculator factors all of these in automatically.