Start from your income, not the sticker. Pick a budget rule, and see the most car you can buy at your rate and term, with sales tax and fees included.
Estimates for planning, not financial, tax or legal advice. Figures use US rules unless the page says otherwise.
The 20/4/10 rule
The 20/4/10 guideline is a common rule of thumb for car buying:
- 20% or more down,
- a loan of 4 years (48 months) or less,
- and total transportation costs, not just the loan payment, under 10% of your monthly income.
The 10% covers the payment plus insurance, fuel and maintenance. The rule doesn't say whether to use income before or after tax, so the calculator lets you choose. Using take-home pay is the more cautious choice.
How it's calculated
Car budget = monthly income × share
Loan payment = car budget − insurance, gas and upkeep
Loan = payment × (1 − (1 + i)−n) ÷ i
Price = (loan − financed fees) ÷ (1 + tax rate − down payment %)
i is the APR ÷ 12 and n is the number of months. The last line works backwards: the loan has to cover the price plus tax and fees, minus your down payment.
Worked example
You earn $75,000 a year, or $6,250 a month before tax. 10% is $625. Insurance, gas and upkeep take $200, leaving $425 for the loan. At 7% for 48 months, $425 a month repays $17,748.09. With $1,000 of fees financed, 7% sales tax and 20% down:
($17,748.09 − $1,000) ÷ (1 + 0.07 − 0.20) = $19,250.67
So about a $19,251 car. Stretch to 72 months and the same payment covers a much pricier car, but you'd pay more interest and owe more than the car is worth for longer.
Limitations
- Your real APR depends on your credit. Get a preapproval from a bank or credit union to know your rate before you shop.
- The tax is on the full price. Many states tax the price minus a trade-in; the auto loan calculator handles trade-ins.
- A rule of thumb isn't a budget. Check that the payment fits with your other debts using the debt-to-income calculator.
Sources
How we checked this
Before every update, this calculator is run in a real browser with these known answers, and it must match all of them:
- $75,000 salary, 10% for car costs, $200 running costs, 20% down, 7% for 48 months, 7% tax, $1,000 fees: about $19,251 ✓
- $5,000 take-home, 15%, $300 costs, 10% down, 6% for 60 months, 6% tax, $500 fees: about $23,726 ✓
- $4,000 take-home, 10%, 0% APR for 48 months, no tax, fees or down: $19,200 ✓
- Running costs bigger than the budget: nothing left for a payment ✓
Last checked October 26, 2026. Spotted something wrong? The math is done in your browser with the formula shown on this page, so you can check any result by hand.
Questions people ask
How much car can I afford on my salary?
Under 20/4/10, keep all car costs under 10% of monthly income. On $60,000 a year that's $500 a month for the payment, insurance, gas and upkeep together. Enter your own numbers above for the price.
How much car payment can I afford?
Take your car budget (for example 10% of income) and subtract insurance, gas and maintenance. What's left is the payment. On $5,000 a month, 10% is $500; with $200 of running costs, about $300 is left for the loan.
Should I use gross or take-home pay?
The 20/4/10 rule doesn't say. Take-home pay gives a lower, safer number because it's what you actually have to spend.
Is 20/4/10 realistic?
It's strict. Many buyers put less down or borrow for longer. If you do, you'll pay more interest and may owe more than the car is worth for a while. The table shows what longer terms do.
Do I include sales tax and fees?
Yes. The price shown is what you can pay before tax and fees, after the calculator sets aside room for both.