Car Affordability Calculator
Enter your income and loan assumptions — your maximum affordable car price updates as you type, and the link always carries your numbers.
How this calculator works
Starting from your gross monthly income, the calculator caps total car spending at 10% and subtracts your estimated insurance, fuel, and maintenance costs — whatever's left is the maximum loan payment you can afford under the rule. From that payment, it back-solves the maximum loan amount using standard amortization at your assumed rate over your loan term, then grosses that up by your down payment percentage to find the maximum car price (a 20% down payment means the loan covers the other 80% of the price). Every step is a rule of thumb, not a hard limit — see the FAQ for an honest take on how conservative it is.
Worked example
At the defaults — $6,000 gross monthly income, a 20% down payment target, a 4-year loan at an assumed 7% rate, and $250/month in estimated insurance, fuel, and maintenance — 10% of income is $600, minus $250 leaves $350/month available for the loan payment. Amortizing $350/month over 48 months at 7% backs into a maximum loan of about $14,616, which grosses up to a maximum car price of about $18,270 at 20% down (an implied down payment of about $3,654). Stretch the same payment over a 6-year loan instead and the maximum loan rises to about $20,529 — a maximum price near $25,661 — which is exactly the "afford more on paper, pay more in the end" trade-off the FAQ describes.
Frequently asked questions
What is the 20/4/10 rule?
A budgeting rule of thumb for car buying: put at least 20% down, finance for no more than 4 years, and keep total monthly car costs — loan payment plus insurance, fuel, and maintenance — at or under 10% of your gross (pre-tax) monthly income. It's a conservative guideline, not a law of physics; this calculator applies it literally so you can see exactly what it implies for your budget.
Is this rule too conservative or too aggressive?
By today's standards, it's on the conservative side. Typical U.S. auto loans now often run 6–7 years, not 4 — a longer term lowers the monthly payment and lets you "afford" a pricier car on paper, but it also means paying more total interest and spending years owing more than the car is worth as it depreciates. The 4-year cap in this rule is a deliberate guardrail against that trap, not an error.
Does the 10% budget include insurance?
Yes — this calculator folds your estimated insurance, fuel, and maintenance costs into the same 10%-of-income ceiling as the loan payment, then backs out how much loan payment is left over. That's more realistic than budgeting for the payment alone and being surprised by running costs afterward.
What if I have other debt, like student loans or a mortgage?
This calculator only weighs car costs against your income — it doesn't look at your other obligations. Lenders and financial planners often also look at total debt-to-income across everything you owe, which this tool doesn't calculate. If you're carrying significant other debt, treat this result as an upper bound, not a target, and consider your full picture rather than relying on one number.