How to use the Car Affordability Calculator
- 1 Enter your gross yearly income.
- 2 Enter monthly insurance, fuel and upkeep.
- 3 Enter your down payment.
- 4 Enter the loan rate and choose the term.
Worked example
An $80,000 income with $300 of monthly running costs, $6,000 down and a 48-month loan at 7%. The 10% budget is $667 a month, leaving $367 for the payment. That supports a loan of about $15,312, so the maximum car price is about $21,312, and the down payment meets the 20% guideline.
Features
20/4/10 rule
20% down, a loan of 4 years or less and car costs under 10% of gross income.
All car costs
Insurance, fuel and maintenance count toward the 10%.
Down payment check
Shows whether your down payment meets 20%.
When to use it
Car shopping
Set a price range before visiting dealers.
New or used
Compare how far your budget goes.
Loan terms
See why longer loans can mislead.
Trade-ins
Count your trade-in as part of the down payment.
Frequently asked questions
What is the 20/4/10 rule?
Put at least 20% down, finance for no more than 4 years, and keep total monthly car costs under 10% of gross income.
Why not take a 72-month loan?
Long loans lower the payment but increase interest and leave you owing more than the car is worth for longer.
What is the average car payment?
New car payments in the US have averaged over $700 a month in recent years, and used car payments over $500.
Should I include insurance?
Yes. Insurance, fuel, maintenance and registration are real costs of owning the car.
How much should I put down?
20% for a new car and at least 10% for a used car helps avoid owing more than the car is worth.
Is leasing cheaper?
Lease payments are usually lower, but you do not own the car at the end.
Does credit score affect what I can afford?
Yes. A lower score means a higher rate, which lowers the loan your payment can support.
Should I buy new or used?
Used cars lose less value, while new cars come with warranties and sometimes low-rate financing.
How much is car insurance?
It varies widely by state, age and driving record. Get quotes before you buy.
What about an electric vehicle?
EVs often cost less to fuel and maintain, which leaves more room for the payment within the 10% rule.
Can I afford a car with student loans?
Yes, but keep total debt payments, including the car, within a comfortable share of income.
Should I pay cash for a car?
Paying cash avoids interest, but keep an emergency fund. A low promotional rate can make financing worthwhile.
Results are estimates based on the official rates linked above. Confirm important figures with the issuing authority or a qualified adviser before you act on them.
Reviewed by ToolsUnlocked Team · Last updated