Car Payment Affordability Calculator
How much car you can afford on the 20/4/10 rule — 20% down, 4-year loan, 10% of income — with insurance, fuel and maintenance counted inside the budget.
Car Payment Affordability Calculator: with the default inputs, car you can afford is $14,608.
Before tax, household total if you are buying together.
The '10' in 20/4/10: payment plus insurance, fuel and maintenance.
The '20'. Twenty percent keeps you ahead of depreciation in the first year.
The '4'. Longer terms buy a bigger car and a much longer stretch of negative equity.
Federal Reserve G.19 reports new-car finance rates; shop your credit union before you shop the dealer.
Varies enormously by state, age and record — use your own quote if you have one.
For an electric car, enter its MPGe and use a per-gallon-equivalent energy price.
AAA's Your Driving Costs puts the average around 10 cents a mile across vehicle classes.
- Loan payment
- $280.92
- Down payment needed
- $2,922
- Cash at signing after trade-in
- $2,922
- Amount financed
- $11,686
- Insurance + fuel + maintenance
- $369.08Per month. This comes out of the same 10%, which is the part most buyers forget.
- All-in monthly cost
- $650.00
- Share of gross income
- 10%
- Interest over the term
- $1,798
- Total cost over the term
- $34,122Down payment plus every loan payment plus running costs. Excludes depreciation and resale value.
Assumptions
- Sales tax, title, registration and dealer fees are not included in the affordable price.
- Depreciation and resale value are excluded — this is a cash-flow budget, not the full economic cost of ownership.
- The loan is a level-payment amortising loan with the first payment one month after signing.
- Maintenance is averaged over the year; real repair costs arrive in lumps.
- Per month$281100%
| Term | Payment | Car you could buy | Interest paid | |
|---|---|---|---|---|
| 2 years | $280.92 | $7,827 | $480 | |
| 3 years | $280.92 | $11,339 | $1,042 | |
| 4 years | $280.92 | $14,608 | $1,798 | ◀ the 20/4/10 limit |
| 5 years | $280.92 | $17,650 | $2,736 | |
| 6 years | $280.92 | $20,481 | $3,842 | |
| 7 years | $280.92 | $23,116 | $5,104 |
The payment is held constant at your budget; a longer term simply moves money from principal to interest.
How this is worked out
The formula
car budget = gross monthly income × budget share (10% under 20/4/10) running costs = insurance + (miles ÷ 12 ÷ mpg × fuel price) + (miles ÷ 12 × maintenance cents ÷ 100) payment budget = car budget − running costs loan = payment × [1 − (1 + r)^−n] ÷ r, r = APR ÷ 12, n = term in months price = loan ÷ (1 − down payment %)
Open How it’s calculated above to see this worked through with your own numbers.
What you enter
- Gross monthly income
- Before tax, household total if you are buying together.in dollars · 0 or more · defaults to 6500
- Share of income for all car costs
- The '10' in 20/4/10: payment plus insurance, fuel and maintenance.a percentage · from 1 to 40 · defaults to 10
- Down payment
- The '20'. Twenty percent keeps you ahead of depreciation in the first year.a percentage · from 0 to 90 · defaults to 20
- Loan term
- The '4'. Longer terms buy a bigger car and a much longer stretch of negative equity.from 1 to 8 · whole numbers only · defaults to 4
- Loan APR
- Federal Reserve G.19 reports new-car finance rates; shop your credit union before you shop the dealer.a percentage · from 0 to 30 · defaults to 7.2
- Insurance
- Varies enormously by state, age and record — use your own quote if you have one.in dollars · 0 or more · defaults to 145
- Miles you drive
- A number.from 0 to 100000 · whole numbers only · defaults to 12000
- Fuel economy
- For an electric car, enter its MPGe and use a per-gallon-equivalent energy price.from 1 to 150 · defaults to 26
- Fuel price
- A number.in dollars · 0 or more · defaults to 3.2
- Maintenance, repairs and tyres
- AAA's Your Driving Costs puts the average around 10 cents a mile across vehicle classes.from 0 to 100 · defaults to 10.1
- Trade-in or cash you already have(under More options)
- Counts towards the down payment, so it reduces the cash you need at signing.in dollars · 0 or more · defaults to 0
What you get back
- Car you can affordmain answer
- Loan payment
- Down payment needed
- Cash at signing after trade-in
- Amount financed
- Insurance + fuel + maintenance
- Per month. This comes out of the same 10%, which is the part most buyers forget.
- All-in monthly cost
- Share of gross income
- Interest over the term
- Total cost over the term
- Down payment plus every loan payment plus running costs. Excludes depreciation and resale value.
What this assumes
- Sales tax, title, registration and dealer fees are not included in the affordable price.
- Depreciation and resale value are excluded — this is a cash-flow budget, not the full economic cost of ownership.
- The loan is a level-payment amortising loan with the first payment one month after signing.
- Maintenance is averaged over the year; real repair costs arrive in lumps.
About this calculator
The 20/4/10 guideline is the most useful piece of car-buying arithmetic in circulation: put 20% down, finance for no more than 4 years, and keep total vehicle costs under 10% of gross income. The third rule is the one people misread. It is not 10% for the payment — it is 10% for the payment plus insurance, fuel and maintenance, which is why this calculator subtracts running costs before it sizes the loan.
How to use it
Enter gross monthly income and adjust the three rule parameters if your situation differs. Then set the running costs: insurance is the one to replace with a real quote, because it swings from under $80 a month for an older driver with a clean record in a cheap state to over $300 for a young driver in an expensive one. Miles, fuel economy and fuel price give the fuel line; maintenance is entered in cents per mile, where AAA's long-running Your Driving Costs study puts the average near 10 cents across vehicle classes.
Use Solve for if you want to run it backwards — fix the car price you have in mind and find the income or the down payment that makes it fit.
Reading the results
Car you can afford is the sticker price, not the amount financed. Sales tax, title and registration sit on top and are not in this number; budget 6–10% more depending on your state. Cash at signing subtracts a trade-in from the down payment. Share of gross income should land at your budget percentage — if it reads higher, running costs have eaten the allowance and the warning above will say so.
The term table is the point of the whole exercise. Holding the payment constant, stretching from four years to seven buys a noticeably more expensive car and hands a large slice of the difference to the lender in interest. It also keeps you in negative equity — owing more than the car is worth — for most of the loan, because a typical new car loses roughly 20% of its value in year one and about 60% over five years.
What this does not include
Depreciation is the largest cost of owning a new car and it does not appear as a monthly bill, so it is not in the 10%. Neither are parking, tolls, or the resale value you get back at the end. If you want the full economic cost of a car rather than the cash flow, add depreciation and subtract the eventual sale price. This calculator answers the narrower and more urgent question: what monthly commitment does your income actually support?
Frequently asked questions
▸What is the 20/4/10 rule?
Put at least 20% down, finance for no more than 4 years, and keep total vehicle costs — payment, insurance, fuel and maintenance — under 10% of gross income. It is a guideline, not a law, but it reliably keeps buyers out of negative equity.
▸How much car can I afford on a $75,000 salary?
That is $6,250 a month gross, so a $625 all-in car budget. At the default running costs of about $369 for insurance, fuel and maintenance, roughly $256 is left for the payment — a four-year loan near $10,650, which is a car around $13,300 with 20% down. Cheaper insurance or fewer miles moves that up quickly.
▸Does the 10% include insurance and gas?
Yes, and that is the part most people get wrong. Running costs commonly take half the allowance, which is why a rule that sounds generous produces a modest car.
▸Is a 72-month car loan a bad idea?
It is not automatically bad, but it costs far more interest and keeps you underwater for most of the term. If the only way to afford a car is to stretch to six or seven years, the car is too expensive for the budget.
▸Should I count a trade-in as my down payment?
Yes — equity in a trade-in does the same job as cash. Enter it under More options and the calculator shows the cash you still need at signing.
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