This car affordability calculator answers “how much car can I afford?” using the popular 20/4/10 guideline. It starts from your income, takes out insurance, fuel and maintenance, and works out the loan and car price that fit your budget, including sales tax.
The 20/4/10 rule
- 20% down payment, so you are less likely to owe more than the car is worth.
- 4 years or less on the loan, to limit interest.
- 10% of gross monthly income or less for all car costs: loan payment, insurance, fuel and maintenance.
Worked example
With a $6,000 gross monthly income, 10% gives a $600 car budget. After $250 of insurance, fuel and maintenance, $350 is left for the loan. At 6.5% over 48 months, that supports a loan of about $14,759. Adding a $5,000 down payment and allowing 7% for sales tax and fees, you can afford a car of about $18,466.
Ways to afford more car without more risk
- Save a bigger down payment.
- Improve your credit score before applying to get a lower rate.
- Consider a reliable used car, which loses value more slowly than a new one.
- Shop insurance quotes before choosing a model; premiums vary widely.
Frequently asked questions
How much should I spend on a car?
A common guideline keeps all car costs under 10% to 15% of gross income. The 20/4/10 rule uses 10%.
Is a 72-month car loan a bad idea?
It lowers the payment but costs more interest and raises the chance of owing more than the car is worth for years. Shorter loans are usually safer.
Should I include insurance in my car budget?
Yes. Insurance, fuel and maintenance are part of the true cost of owning a car.
What if I am paying cash?
Then there is no loan, but it is still wise to keep running costs within budget and not drain your emergency fund.
Related calculators
- Auto Loan Calculator
- Cash Back or Low Interest Calculator
- Auto Lease Calculator
- Gas Mileage Calculator
Sources
Last reviewed: October 2026. For information only; not financial, tax or legal advice.