Can I afford this car?
One set of numbers, four answers: what the loan costs, whether the deal passes the 20/4/10 rule of thumb, what lenders will see in your debt, and the cash you need at signing. Change anything and every answer updates. The starting numbers are an example, not a market quote.
You can likely get the loan, but at least one 20/4/10 guideline is stretched. Read the reasons below before you sign.
- All-in monthly cost
- $857
- Loan payment
- $507
- Share of gross income
- 13.7%
- Cash left after signing
- $6,040
- All-in transportation cost is 13.7% of gross income ($857 a month), above the 10% guideline.
- The 60-month loan is longer than the 48-month (4-year) guideline.
Step 1
What will the loan cost?
You would borrow $25,600 and pay $507 a month for 60 months, $4,815 of it interest.
- Amount financed
- $25,600
- Monthly payment
- $507
- Total interest
- $4,815
Step 2
Does it pass the 20/4/10 check?
1 of 3 guideline tests pass. This is a rule of thumb, not a lender rule.
- Down payment plus trade-in (at least 20%)
- 20.0% · Pass
- Loan term (at most 48 months)
- 60 months · Fails
- All-in cost (under 10% of income)
- 13.7% · Fails
A payment of $275 a month or less keeps all-in cost at 10% of income with the insurance and running costs you entered.
See the same car on a 48-month loan →Step 3
What will lenders see in your debt?
With the car payment, debt takes 30.5% of gross income. The ceiling used here is 43%.
- Other monthly debts
- $1,400
- Car payment
- $507
- Debt-to-income with the car
- 30.5% · Pass
Step 4
Do you have the cash, and what is the total cost?
Yes: you would keep $6,040 after signing.
- Cash down payment
- $6,400
- Sales tax and fees
- $2,560
- Cash needed at signing
- $8,960
- Total paid over 60 months
- $60,375
Total paid adds the down payment, tax and fees, every loan payment, insurance, fuel and maintenance. It leaves out the value of your trade-in and what the car is worth at the end.
See how much the car may lose in value →Compare scenarios
Change the price, down payment or loan term, press “Save scenario”, and compare up to four side by side. They stay in this browser only.
How the verdict is decided
The yardstick is the 20/4/10 rule of thumb: at least 20% down (cash plus trade-in), a loan of at most 48 months, and total transportation cost (loan payment, insurance, fuel and maintenance) under 10% of gross income. It is a guideline from personal-finance writing, not a lender rule.
- Within your budget: all three 20/4/10 tests pass, debt-to-income with the car is at most 43%, and your cash covers the down payment plus sales tax and fees.
- Possible, but tight: you clear the 15% cost ceiling, the 43% debt ceiling and the cash test, but at least one 20/4/10 test fails. The reasons list says which one, with your numbers.
- Over budget: you are short on cash at signing, the all-in cost is above 15% of gross income, or debt-to-income with the car is above 43%.
Assumptions: sales tax and fees are charged on the full price and paid in cash at signing; the loan is a fixed-rate loan with equal monthly payments; the 43% and 15% limits are cut-offs this tool chooses, not rules every lender applies. The payment uses the same formula as our auto loan calculator. For related questions see the debt-to-income calculator, lease versus buy and vehicle depreciation. See how we test and verify and the public corrections log.
Frequently asked questions
What is the 20/4/10 rule?
It is a rule of thumb from personal-finance writing: put at least 20% down, finance for no more than 4 years (48 months), and keep total transportation cost under 10% of your gross income. It is not a lender rule and no bank applies it; this tool uses it as a yardstick for what is comfortable, not for what you can be approved for.
What counts as “all-in” monthly cost?
The loan payment, plus the insurance and the fuel and maintenance you enter. Parking, tolls, registration renewals and repairs beyond routine maintenance are not included unless you add them to the running-cost field.
How are the down payment, trade-in and sales tax treated?
The cash down payment is a percentage of the price. Your trade-in is entered separately and counts toward the 20% test alongside the cash. Sales tax and fees are charged on the full price and paid in cash at signing, so they add to the cash you need but not to the loan. Many states reduce the tax by your trade-in value, so this is a cautious estimate; use your state’s rules and the dealer’s itemised quote for the real figure.
Why is the debt-to-income ceiling 43%?
Lenders compare your monthly debt payments, including rent or a mortgage, with your gross monthly income. A 43% total is a commonly cited ceiling in mortgage lending, and car lenders often look at similar ratios, but each lender sets its own limits and weighs credit score and income stability. Treat it as a warning level, not an approval line.
What decides “over budget” and “tight”?
Over budget means you are short on cash at signing, the all-in cost is above 15% of gross income, or debt-to-income with the car is above 43%. Tight means none of those, but at least one 20/4/10 test fails. The 15% ceiling is this tool’s own cut-off, chosen as 1.5 times the guideline; it is a judgement call, not an industry standard.
Is my information sent anywhere, and is this financial advice?
Nothing is sent. Everything is calculated in your browser, saved scenarios stay in this browser’s local storage, and “Copy link” puts your numbers in the web address so you can share or bookmark them. This is an estimate built on stated assumptions, not financial advice. Your lender’s quote and your own budget are the final word.