Why is the loan term fixed at 4 years here?

Because the rule specifically recommends 4 years or less — letting the term stretch longer would make an unaffordable car look affordable on paper by lowering the monthly payment, while increasing total interest paid.

What if I can't afford 20% down?

The rule is a guideline, not a requirement — many financial educators suggest treating the 4-year term and 10%-of-income ceiling as the two non-negotiables, and putting down whatever you reasonably can toward the 20% target.

Does the 10% include just the loan payment?

No — it's meant to cover your full transportation cost: loan payment, insurance, fuel, and maintenance combined, which is why this calculator asks for those other costs separately before computing the maximum loan payment.

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Finance

Car Affordability Calculator

How much car you can afford using the 20/4/10 rule.

🔒 Runs entirely in your browser — nothing here is ever uploaded

Last reviewed 2026-08-25

About the Car Affordability Calculator

Estimates the maximum car you can afford using the 20/4/10 rule — at least 20% down, a loan term of 4 years or less, and total monthly transportation costs at or under 10% of your gross income.

How to use it

Enter your Annual gross income and the Down payment you have available.
Enter your expected Interest rate and your Other monthly car costs (insurance, fuel, maintenance).
Read your maximum vehicle price, loan amount, and monthly payment in the result panel.

Formula

Maximum monthly transportation budget = gross monthly income × 10%
Maximum loan payment = that budget − your other monthly car costs
Maximum loan amount = present value of that payment over a 4-year (48-month) term at your interest rate
Maximum vehicle price = maximum loan amount + your down payment

The 20/4/10 rule — 20% down, a loan term of 4 years or less, transportation costs at or under 10% of gross income — a widely cited car-affordability guideline covered by Chase, J.D. Power, and other major auto and financial publishers.

Worked example

On a $75,000 income with a $5,000 down payment, $150/month in other car costs, and a 7.5% rate, the maximum loan payment is about $475/month, which supports $19,645 financed — for a maximum vehicle price of $24,645, with the $5,000 down payment covering about 20% of that price.

Interpreting your result

The 48-month loan term is fixed to match the rule itself, not user-adjustable — a longer term would let you "afford" a more expensive car on paper while paying more total interest, defeating the rule's purpose.

Recommendations

• "Other monthly car costs" matters more than people expect — insurance, fuel, and maintenance can easily add $200-400/month, directly shrinking how much loan payment your 10% budget leaves room for.
• If you can't hit all three parts of the rule at once, most financial educators suggest prioritizing the 4-year term and 10%-of-income ceiling over the 20% down payment — a smaller down payment is easier to make up for than an overly long loan or an overstretched monthly budget.
• A longer loan term (72-84 months) can lower the monthly payment enough to pass the 10% test while still costing meaningfully more in total interest — check this site's Auto Loan Calculator to see the real total cost of a longer term before choosing one.

Frequently asked questions

20% down payment, a loan term of 4 years or less, and total monthly transportation costs (payment + insurance + fuel + maintenance) at or under 10% of your gross monthly income.