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The 20/4/10 rule for affordable car buying

Original: How much car can you actually afford? The 20/4/10 rule: 20% down, 4-year loan max, payment + insurance under 10% of gros

A personal finance guideline called the 20/4/10 rule is being shared as a way to calculate how much car a buyer can truly afford: put 20% down, keep the loan to four years, and cap combined car payment and insurance at 10% of gross income. Worked examples show a $75,000 salary supporting roughly a $475 monthly payment, or a loan near $19,800 at 7% over 48 months.

Why now: High car prices and loan rates have renewed interest in simple affordability rules for buyers weighing financing decisions.

20/4/10 rulecar buyerspersonal finance

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Evidence

• How much car can you actually afford? The 20/4/10 rule: 20% down, 4-year loan max, payment + insurance under 10% of gross income. $75k salary = $625/mo. Minus $150 insurance = $475 payment. At 7% over 48 months that's a ~$19,800 loan. With $8k down + trade-in: a car of about… · smartbudgetsheets · 2

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