Buying & Finance · Free tool
Free Car Affordability Calculator
Enter your income and what the car will cost to run. The calculator applies the 20/4/10 rule and works back to the price you can afford.
- Free to use
- No signup
- Runs in your browser
Your budget
Before tax for the classic rule. Use take-home pay for a stricter test.
Monthly running costs
AAA’s 2026 average for a new car is $175 a month.
The loan
Car price you can afford
$14,306
Before sales tax, at the payment your budget leaves room for.
- Budget for all car costs (10%)
- $650 / mo
- Insurance, fuel and upkeep
- $425 / mo
- Left for the loan payment
- $225 / mo
- Largest loan that payment repays
- $9,306
- Price including tax
- $14,306
- 20% down: you are putting down 35%. The rule asks for $2,861.
- 4 years: a 48-month loan is within the rule.
- 10% of income: built into the price above.
The rule is strict by design. If the price looks low, most of the budget is going on running costs.
An estimate from the figures you enter, not a quote. Read the disclaimer. Updated .
02Your result
What your car affordability result means
The price is a ceiling, not a target. It is the most the rule lets you spend, and less is better.
- 01
The price you can afford
The largest loan your payment room can repay, plus your down payment and trade-in, with sales tax taken back out.
- 02
Left for the loan payment
Your car budget minus insurance, fuel and upkeep. This figure, not the sticker price, is what the rule really limits.
- 03
The three checks
Whether your down payment reaches 20%, whether the term stays within four years, and the share of income you chose.
What to do next
Turn the price into a payment
Enter the price and your loan terms to see the payment, the interest and the yearly balance.
Car payment calculatorCount every running cost
Add depreciation, fuel, insurance and maintenance over five years.
Ownership cost calculatorRead the budget section
How the 20/4/10 rule works in practice, and which of the three numbers to bend first.
Set your budget
03How it works
The car affordability formula: the 20/4/10 rule
The rule has three parts: at least 20% down, a loan of no more than 4 years and no more than 10% of your income on all car costs. The calculator turns that into a price in three steps.
M = I × s − C
Income times the share you allow, less insurance, fuel and upkeep.
L = M × (1 − (1 + r)^−n) ÷ r. Price = (L + D) ÷ (1 + t)
Add the down payment and trade-in (D), then divide by 1 plus the sales tax rate (t) to reach the price.
What each term means
- I
- Your monthly income.
- s
- The share of income for all car costs: 0.10 under the rule.
- C
- Monthly running costs: insurance, fuel, maintenance and repairs.
- M
- What is left each month for the loan payment.
- r, n
- The monthly interest rate (APR ÷ 12) and the number of monthly payments.
- L, D, t
- The loan, your down payment plus trade-in, and the sales tax rate.
What the tool assumes
- A fixed-rate loan with equal monthly payments.
- Sales tax is charged on the full price.
- Your running costs stay at the monthly figures you enter.
- Registration and dealer fees are not included. Add them with the out-the-door calculator.
04Worked example
Car affordability example on a $6,500 monthly income
A buyer earning $6,500 a month, with $5,000 saved and running costs of $425 a month, borrowing at 7.5% APR for four years.
- 01
Set the car budget
$6,500 income × 10%
$650
- 02
Take off the running costs
$650 − $425 for insurance, fuel and upkeep
$225
- 03
Find the loan that payment repays
$225 a month for 48 months at 7.5% APR
$9,306
- 04
Add the down payment
$9,306 + $5,000
$14,306
- 05
Check the 20% test
$5,000 ÷ $14,306
35% down
Price this buyer can afford
$14,306
The down payment clears 20% and the term is four years, so all three parts of the rule are met.
Try your own numbers05Background
What the 20/4/10 rule is, and why it is strict
The 20/4/10 rule is a rule of thumb for buying a car without straining your finances. Each number guards against a different problem.
- 20% down keeps the loan below the car’s value from the first day, because a new car loses about a fifth of its value in year one.
- 4 years limits the interest. A longer loan lowers the payment, but you pay more interest over the life of the loan.
- 10% of income covers every car cost, not the payment alone. That is the part people skip.
Publishers do not all state the last number the same way. Experian describes it as limiting transportation costs, including the payment, fuel and insurance, to 10% to 15% of monthly income. The calculator lets you choose 10%, 15% or 20% so you can see how much the answer moves.
Running costs are large. AAA puts full-coverage insurance on a new car at $2,098 a year in 2026, which is about $175 a month before you have bought any fuel. That is why the affordable price can look low: the rule counts those costs first. See how to set a budget for which number to bend if you must bend one.
06When to use it
When to use a car affordability calculator
Use it before you look at cars, so the budget chooses the car and not the other way round.
Before you start shopping
Set a price ceiling first, then search only below it.
To filter listings
Use the price as the upper limit in any used car search.
To test a longer term
See how much more a 60 or 72-month loan appears to buy, and what it breaks in the rule.
To compare two incomes or budgets
Run it with and without a second income, or at 10% and 15%.
Mistakes to avoid.
- Counting only the loan payment against the 10% and ignoring insurance and fuel.
- Treating the result as a target to spend up to.
- Stretching the term to make a more expensive car fit.
- Using the income you hope to earn instead of the income you have.
07Related guides and tools
Keep going from here.
Guides that go with this tool
Related tools
- Car Payment CalculatorWork out the monthly payment, total interest and payoff schedule for a car loan.
- Car Ownership Cost CalculatorAdd up fuel, insurance, maintenance and depreciation over five years.
- Out-the-Door Price CalculatorAdd tax, registration and dealer fees to see the real price you will pay.
08Questions
Car Affordability Calculator: your questions.
How much car can I afford?
Under the 20/4/10 rule you can afford a car when you put at least 20% down, finance it for no more than four years and keep all car costs, including the payment, insurance and fuel, within 10% of your income. Enter your figures in the calculator to turn that into a price.
What is the 20/4/10 rule?
It is a budgeting rule for buying a car: a down payment of at least 20%, a loan term of no more than 4 years and no more than 10% of your income spent on total transportation costs.
Does the 10% include insurance and gas?
Yes. The 10% is meant to cover all car costs. Experian describes it as transportation costs including monthly car payments, fuel, car insurance and other expenses, and gives a range of 10% to 15% of monthly income.
Should I use gross or take-home income?
The classic rule is usually applied to income before tax. Using take-home pay gives a lower, safer price. The calculator accepts either, so try both and treat the gap as your margin.
Why is the price the calculator gives so low?
Because the rule counts insurance, fuel and maintenance before the loan payment. If those already take most of the 10%, little is left to borrow against. Raising the share to 15% or lowering your running costs shows how sensitive the answer is.
09Estimates and sources
Read this before you rely on it.
Built and checked by CarTipsMentor Team. Last updated . How we check our work.
Sources
- [1]Experian, How Much Income Do You Need to Buy a Car? (April 2025)
- [2]AAA, Your Driving Costs 2026 (brochure)
- [3]Consumer Financial Protection Bureau, Auto loan answers: key terms
- [4]Experian, What Is Car Depreciation?