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The 20/4/10 rule caps the term at 48 months.
20% Down Payment
4-Year Max Loan Term
10% of Gross Income
True Cost of Ownership
The loan payment is only part of the story. The 20/4/10 rule's 10% limit applies to everything the car costs you each month.
| Cost item | Monthly | Annual |
|---|---|---|
| Loan payment (60 mo at 6.5%) | $-- | $-- |
| Insurance estimate (-- avg) | $-- | $-- |
| Fuel (-- mi/yr at -- MPG) | $-- | $-- |
| Maintenance estimate (vehicle age band) | $-- | $-- |
| Total true cost | $-- | $-- |
Insurance figures are illustrative state-average full-coverage premiums for an average driver, not quotes. Your actual premium depends on your driving record, vehicle, coverage level, and insurer. Fuel assumes your inputs above. Maintenance is an average estimate by vehicle age band; older cars cost more to keep.
Your Affordability Verdict
The maximum car price you can afford under all three rules at once. The binding constraint is highlighted.
What is the 20/4/10 rule?
The 20/4/10 rule is a simple guardrail for car buying:
- 20 — Put at least 20% down. A large down payment keeps you from going underwater (owing more than the car is worth) the moment you drive off the lot.
- 4 — Finance for no more than 4 years (48 months). Long terms like 72 or 84 months lower the payment but pile on interest and leave you paying for a car that keeps losing value.
- 10 — Keep your total monthly car costs (payment, insurance, fuel, maintenance) at or under 10% of your gross monthly income.
Why true cost of ownership matters
Most affordability calculators only check the loan payment. A $450 payment can quietly become $750 a month once insurance, fuel, and maintenance are added. That is why this calculator applies the 10% rule to your total monthly cost, not just the payment. If you only budget for the payment, you will overbuy.
How the verdict works
The verdict computes the highest car price that satisfies all three rules at once, using a 48-month term at your APR. It shows what each rule allows on its own, and highlights the binding constraint: the rule that is actually limiting you. Fix that one first to afford more car safely.