Car Affordability Calculator (20/4/10 Rule)
Enter your income and the rate you can get. The calculator applies the 20/4/10 rule and shows the maximum car price that fits your budget without wrecking it.
| Down payment (20%) | — |
| Loan amount (4 years) | — |
| Monthly payment | — |
| Monthly car budget (incl. running costs) | — |
The 20/4/10 rule explained
- 20% down — instant equity so you are never underwater on the loan.
- 4-year loan maximum — keeps total interest small and matches the loan to the fastest depreciation years.
- 10% of gross income — for all car costs: payment, insurance, fuel, maintenance. This calculator reserves about a third of the budget for those running costs.
On $70,000 of income, that means roughly $583/month of total car budget, about $380 of it available for the payment — supporting a car around the mid-$20,000s.
Why the rule feels strict (and why it works)
The average new-car price is far above what median income affords under 20/4/10 — the gap is exactly why the average car loan keeps stretching to 70+ months and why so many trade-ins carry negative equity. The rule is not about what a lender will approve (they approve much more); it is about buying a car that leaves room for savings, housing, and everything else. Test any specific car with the car loan calculator.
Frequently asked questions
How much car can I afford on $70,000 a year?
By the 20/4/10 rule: roughly a $25,000–28,000 car with $5,000+ down and a payment near $380/month, keeping total car costs under $583/month (10% of gross income).
What is the 20/4/10 rule?
Put at least 20% down, finance for no more than 4 years, and keep total monthly car costs — payment, insurance, fuel — under 10% of your gross income.
Is the 10% before or after tax?
The classic rule uses gross (pre-tax) income. Using take-home income instead makes it stricter and safer.
What if lenders approve me for much more?
They will — approval is based on default risk to them, not on your financial health. A lender approving a $700 payment does not make it affordable; it makes it profitable.
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Last updated: 2026-07-07