Calculate whether a car fits the 20/4/10 rule and find the max price, down payment, and monthly payment based on your gross monthly income.

20/4/10 Rule – Afford This Car

Afford This Car
Max Purchase Price

Enter car price & income to see if it fits the 20 / 4 / 10 rule.

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 = ?

Calculator Change Log:

  • 6/9/25 – Added two different modes of calculation. Afford this car mode and max purchase price mode. Both modes use the 20/4/10 rule.