Car Affordability Calculator
Work out the car price that fits your income using the 20/4/10 rule — payment and insurance inside 10% of gross, a term no longer than four years.
Share of gross going to car payment + insurance. 10% follows the 20/4/10 rule.
The 20/4/10 rule in full — 20% down, no more than 4 years, all car costs under 10% of gross income. The term cap is the one people break first, and it is the one that quietly makes expensive cars look affordable.
Start from your income, not the lot
Car shopping runs backwards for most people — pick the car, then discover what financing makes it “fit.” This calculator runs the direction that protects you — income first, budget out, price ceiling last. The number it produces is usually smaller than the dealership’s, and that gap is the whole point.
Why each leg of 20/4/10 exists
20% down keeps you from being underwater the moment you drive off — cars shed value faster than loans amortize, and insurance pays market value, not loan balance, if it is totaled.
4 years maximum is the honesty test. Any car can “fit” at 84 months; the 4-year cap forces the price to fit your actual income. If the payment only works at longer terms, the auto loan calculator will show you exactly what those extra years cost in interest.
10% of gross for payment plus insurance keeps transportation from crowding out housing and savings. The insurance input matters more than people expect — quotes on the specific car before buying, not after, because a sporty trim can add $100 a month that this budget has to absorb.
The costs that keep coming
The purchase is the beginning. Per federal transportation data, owning and operating a car runs five figures a year all-in once fuel, maintenance, insurance and depreciation are counted — your commute alone has a price tag worth knowing before committing to it. A car that passes the purchase test but fails the operating test is still the wrong car.
How this is calculated
Monthly budget = gross monthly income × 10% (or 15% flexible) Payment room = budget − insurance Max loan = present value of that payment over the term Max price = max loan + down payment
Frequently asked questions
- How much car can I afford on my salary?
- By the strict 20/4/10 rule, a $70,000 income supports roughly $580 a month for payment plus insurance — which finances something in the mid-$20,000s over four years with a modest down payment. The flexible 15% setting stretches that, at the cost of the rest of your budget.
- What is the 20/4/10 rule?
- Put at least 20% down, finance for no more than 4 years, and keep total car costs — payment and insurance together — under 10% of gross income. Each leg blocks a different mistake, and the 4-year cap is the one that keeps a payment honest about the car's real price.
- Why does the dealer approve me for so much more?
- Lenders approve against default risk, not against your other goals — a payment can be very affordable to them while eating your savings rate entirely. The gap between approved and advisable is where most car regret lives.
- New or used?
- The rule is agnostic, but depreciation is not — a new car sheds roughly 20% of its value in year one, and a 2-3 year old car lets someone else pay that. What matters more is the total cost of the specific car against this budget, including its insurance quote, not the sticker alone.