How Much Car Can I Afford?
Before you fall in love with a car at the dealership, work out what your income actually supports. Enter your numbers below to see the maximum price you can afford — and how it scores against the well-known 20/4/10 rule.
Your budget
New to this? Leave the defaults — they follow the conservative 20/4/10 rule — and just change your income and down payment.
Your 20/4/10 scorecard
The classic rule for buying a car without overextending yourself.
What makes up the price
Your down payment and trade-in plus the loan your payment supports.
Does a longer loan help?
At the same monthly payment, a longer term buys more car — but costs more interest.
| Term | Max car price | Payment | Total interest |
|---|
How much car can you afford by salary
A quick reference using the 20/4/10 rule — 10% of income toward the payment, a 4-year loan at 7%, with a modest down payment. Updated June 2026.
| Annual salary | Monthly payment | Car you can afford |
|---|---|---|
| $40,000 | $333/mo | $16,900 |
| $50,000 | $417/mo | $20,400 |
| $60,000 | $500/mo | $23,900 |
| $75,000 | $625/mo | $29,100 |
| $100,000 | $833/mo | $37,800 |
| $125,000 | $1,042/mo | $46,500 |
| $150,000 | $1,250/mo | $55,200 |
These are conservative, rule-of-thumb figures; a longer loan or larger down payment raises them. Run your exact numbers in the calculator above.
How much car can you really afford?
It's tempting to shop by monthly payment, because a long enough loan can make almost any car "fit" your budget. But the monthly payment hides the real cost — and dealers know it. The smarter question is how much total car your income supports without crowding out everything else, and the most-cited answer is the 20/4/10 rule.
The 20/4/10 rule
- 20% down. Put at least a fifth of the price down (cash + trade-in). This offsets the steep first-year depreciation so you're not instantly underwater.
- 4 years max. Finance for no more than 48 months. If you need a longer loan to afford the payment, you're buying too much car.
- 10% of income. Keep all monthly car costs — payment, insurance, fuel and maintenance — under 10% of your gross monthly income.
It's deliberately conservative. Plenty of people break it — the average new-car loan now stretches well past 5 years — but the further you drift from it, the more of your paycheck a depreciating asset quietly consumes.
How we calculate it
We turn the share of income you choose into a monthly payment budget, then work backwards from that payment to the largest loan it supports, and add your down payment and trade-in:
Max loan = payment × (1 − (1 + r)−n) ÷ r (r = monthly rate, n = months)
Max car price = max loan + down payment + trade-in
Worked example: On a $60,000 income, 10% of monthly income is a $500 payment. At 7% over 48 months that supports a ~$20,900 loan, and with $3,000 down you can afford about a $23,900 car — right in line with the 20/4/10 rule.
What changes how much car you can afford
- Your credit score. It sets your APR, and the gap between a good and a poor rate can be several percentage points — thousands of dollars of car.
- Down payment. Every dollar down is a dollar of car you don't finance — and getting to 20% keeps you from owing more than the car is worth.
- Loan term. A longer loan lifts the price you can "afford" but piles on interest, as the table above shows.
- The hidden costs. Insurance, fuel, maintenance and registration can rival the payment itself — which is exactly why the 20/4/10 rule budgets for total car costs, not just the loan.
Glossary
- 20/4/10 rule
- A car-buying guideline: 20% down, a term of 4 years or less, and total car costs under 10% of gross income.
- Underwater (upside-down)
- Owing more on your car loan than the car is worth — common early in a long loan with little down.
- Trade-in value
- What a dealer credits you for your current car, which counts toward your down payment.
- APR
- The annual percentage rate on your loan, set largely by your credit score.
Frequently asked questions
How much car can I afford on my salary?
A common guideline is to keep your car payment to about 10–15% of your gross monthly income. On a $60,000 salary that's roughly $500–$750 a month, which — with a modest down payment at today's rates — supports a car in the low-to-mid $20,000s to mid-$40,000s depending on your loan term. Enter your own numbers above for a personalized figure.
What is the 20/4/10 rule for buying a car?
The 20/4/10 rule says: put at least 20% down, finance for no more than 4 years (48 months), and keep your total monthly car costs — loan payment plus insurance, fuel and maintenance — under 10% of your gross monthly income. It's a conservative guideline that keeps you from being overextended on a depreciating asset.
Is it better to have a longer car loan to afford more car?
A longer loan lowers your monthly payment so you can buy a more expensive car, but you pay much more interest and stay "underwater" (owing more than the car is worth) far longer. Stretching from a 48-month to an 84-month loan can let you buy thousands more car while adding thousands in interest — see the term comparison table for the trade-off.
Should my car payment be based on gross or take-home pay?
The 20/4/10 rule uses gross (pre-tax) income, which is what this calculator uses by default. Because taxes reduce your actual take-home pay, basing the percentage on gross income is already somewhat conservative — but if money is tight, running the same percentages against your take-home pay gives you an even safer budget.
→ Car loan payment calculator · Monthly debt calculator · Debt-to-income calculator · All calculators