Enter the car price of your wanted car ($) into the 20/4/10 Rule Calculator. The calculator will evaluate the down payment and minimum monthly income. ## 20/4/10 Rule Formula The following two example problems outline the steps and information needed to calculate the 20/4/10 Rule. DP = CP * .20 MI = MC / .10 Variables: • DP is the down payment ($)
• MI the minimum monthly income ($) • MC is the monthly car cost on the 4 or less year loan ($)
• CP is the car price of wanted car ($) The 20/4/10 rule states that you should be able to afford 20% of the down payment on a car and for the monthly cost to be less than 10% of your monthly income when a loan of 4 or less years is used. ## How to Calculate 20/4/10 Rule? The following steps outline how to calculate the 20/4/10 Rule. 1. First, determine the car price of wanted car ($).
2. Next, gather the formula from above = DP = P * .20.
3. Finally, calculate the 20/4/10 Rule.
4. After inserting the variables and calculating the result, check your answer with the calculator above.

Example Problem :

Use the following variables as an example problem to test your knowledge.

car price of wanted car (\$) = 25,000

DP = P * .20 = ?