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.

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## 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.

- First, determine the car price of wanted car ($).
- Next, gather the formula from above = DP = P * .20.
- Finally, calculate the 20/4/10 Rule.
- 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** **= ?