Cost examples updated November 6, 2026
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The benchmark: 20 / 4 / 10
The most commonly quoted affordability benchmark is called 20/4/10: put at least 20% down, finance for no more than 4 years, and keep total car costs, payment, insurance, fuel and maintenance, under 10% of your gross income. It is a benchmark, not a law, and nobody enforces it. Its value is that it counts the whole car, not just the payment. How much of that should be cash up front? See how much to put down on a car.
For the same car financed at 60, 72, and 84 months side by side, with the loan balance set against the car's value each year, see is an 84-month car loan a good idea.
That last part is where most budgets quietly break. On a typical sedan, insurance and fuel alone run about $296 a month before the payment exists (roughly $160 of insurance and $136 of fuel at 30 mpg, 12,000 miles a year and $4.071 a gallon, EIA, week ending August 31, 2026). A typical SUV runs about $335 a month the same way. Those are planning figures, not quotes, but any honest affordability answer has to start by subtracting them.
The benchmark, worked out
Using 8% APR, 7% sales tax and $900 in fees, here is what 20/4/10 produces at three incomes. The car price is what remains after the payment budget is converted back through a 48-month loan with 20% down:
- $50,000 income: total budget $417 a month. After $296 of sedan running costs, the payment budget is $121, about a $4,600 car.
- $75,000 income: total budget $625 a month. Sedan: $329 payment budget, about a $14,500 car. SUV: $290 payment budget, about a $12,600 vehicle.
- $100,000 income: total budget $833 a month. Sedan: $537 payment budget, about a $24,300 car. SUV: $498 payment budget, about a $22,400 vehicle.
Go ahead, play with it. Change any number and watch the total move.
Run your own income
Same benchmark, your numbers. Enter your gross yearly pay and the kind of car, and the page works the 20/4/10 math for you: 10% of gross monthly pay, minus running costs, converted back into a car price at 20% down. The benchmark uses a 48-month loan; longer terms are shown so you can see what stretching costs. If you have a car to trade in, enter its value: it comes straight off the amount you finance, so the same payment budget stretches to a higher price. The credit tier sets the rate to the Experian Q2 2026 national average for that tier and vehicle condition, not a lender quote. Across all borrowers the averages are 6.35% on a new car and 11.19% on a used car. Your actual rate depends on the lender, the car, and your full credit picture, so replace it with a real offer when you have one. For what each tier costs in dollars on a real loan, using published Experian averages, see how much your credit score costs on a car loan.
Assumptions shown, not hidden: 7% sales tax, $900 in fees, running costs as selected above, trade-in subtracted from the amount financed. The result is what the benchmark points at, a measuring stick, not a rule anyone must follow.
Where the numbers come from: interest rates, Experian, Q2 2026, new-car average 6.35%, used 11.19%, by credit tier from 4.41% to 21.62% · average new car $50,562, Kelley Blue Book, September 2026 · sedan fuel line at $4.071 a gallon, EIA, week ending August 31, 2026 · the 20/4/10 benchmark, described by J.D. Power.
The bill behind any quote, line by line, is on the dealer fees page.
Calculation transparency
Jurisdiction. United States. Sales tax, titling, registration and insurance rules are set by your state, so your exact numbers depend on where you buy and register the car.
Rules and time period. The 20/4/10 benchmark: 20% down, a loan of no more than 48 months, and total car costs under 10% of your gross monthly income. The worked example uses 8% APR, 7% sales tax and $900 in fees, and 12,000 miles a year.
Scope and limitations. Educational estimate only. Running costs are planning figures, not quotes. Get a real quote for the same car, coverage and loan before you decide. A buyer order is the document that binds.
Source links checked November 6, 2026. Figures: Experian State of the Automotive Finance Market (Q2 2026); Kelley Blue Book average transaction prices (September 2026); EIA weekly gas prices (week ending August 31, 2026); J.D. Power description of the 20/4/10 rule.
Primary sources: Experian, average car payment and loan rates; Kelley Blue Book, September 2026 average transaction prices; EIA, Gasoline and Diesel Fuel Update; J.D. Power, the 20/4/10 rule; CFPB, auto-loan shopping guidance; Regulation Z, 12 CFR Part 1026. How the numbers are calculated is written down on the methodology page, and every source is listed on the sources page.
How to use
- Enter your gross yearly income. The benchmark takes 10% of your gross monthly pay as the total car budget.
- Pick sedan or SUV. Running costs are $296 a month for a sedan and $335 for an SUV, taken off the budget before any payment.
- Set the down payment and the loan length. The benchmark uses 20% down and 48 months. Longer terms are shown so you can see what stretching costs.
- Enter the interest rate, or pick a credit tier. A tier fills in the Experian Q2 2026 average rate for that tier and vehicle condition, not a lender quote.
- Read the price the benchmark points at, then check the three budget lines. The conservative line uses 10% of take-home pay, the recommended line is 20/4/10, and the max line stretches to 15% of gross pay.
Formula
Monthly budget is gross yearly income divided by 12, times 10%. Payment budget is the monthly budget minus running costs. Running costs for a sedan are $160 of insurance, a planning figure, plus fuel: 12,000 miles a year divided by 30 miles per gallon, times $4.071 a gallon (EIA, week ending August 31, 2026), which is $136 a month, $296 in all. The SUV figure is $335 a month, the page's planning figure.
The loan is the amount the payment budget supports over the term at the interest rate. The monthly payment equals the loan amount times the monthly rate times one plus the monthly rate raised to the number of months, all divided by one plus the monthly rate raised to the number of months, minus one. The monthly rate is the APR divided by 12.
The amount financed is the car price minus the down payment, plus 7% sales tax on the price, plus $900 in fees, minus any trade-in. Turned around, the car price equals the loan amount, minus $900 in fees, plus the trade-in, divided by one minus the down payment share plus the 7% tax share. Out the door equals the car price times 1.07 plus $900. Interest over the term equals the monthly payment times the number of months minus the loan.
The SUV running-cost figure is the page's planning figure. The page does not break out the SUV's insurance and fuel lines, so its fuel line has not been re-priced to the current gas average; the sedan line has.
The 20/4/10 rule itself is 20% down, a loan of no more than 4 years, and total car costs under 10% of gross income. The conservative budget line uses 10% of take-home pay, estimated here at 75% of gross pay, and the max line uses 15% of gross pay.
The $75,000 sedan example, line by line
Every line below is worked from the same inputs the calculator uses: $75,000 gross pay a year, a sedan, 20% down, 48 months, 8% APR, 7% sales tax and $900 in fees. Dollar figures are rounded to the nearest dollar, so two rounded figures can differ by a dollar from the exact gap between them.
- Monthly gross pay: $75,000 divided by 12 is $6,250.
- 10% total budget: $6,250 times 10% is $625 a month.
- Fuel: 12,000 miles a year divided by 30 miles per gallon is 400 gallons a year. 400 times $4.071 a gallon is $1,628.40 a year, which is $135.70 a month, rounded to $136.
- Running costs: $160 of insurance plus $136 of fuel is $296 a month.
- Payment budget: $625 minus $296 is $329 a month.
- Loan the payment supports: $329 a month over 48 months at 8% APR supports a loan of $13,476.47.
- Car price: ($13,476.47 minus $900 in fees) divided by (1 minus 0.20 plus 0.07) is $12,576.47 divided by 0.87, which is $14,455.71, about $14,500.
- Check, the loan rebuilds exactly: 20% down on $14,455.71 is $2,891.14, and 7% tax is $1,011.90. $14,455.71 minus $2,891.14 plus $1,011.90 plus $900 is $13,476.47, the loan from step 6.
- Out the door: $14,455.71 times 1.07 plus $900 is $16,367.61, about $16,400.
- Interest over 48 months: $329 times 48 is $15,792, minus the $13,476.47 loan, is $2,315.53, about $2,316.
- Same loan over 72 months: about $236 a month, and $3,536.14 of interest, about $3,536. The gap between the two interest totals is $1,220.60, about $1,221.
- Verdict check: the $329 payment is 5.3% of gross monthly pay ($6,250) and 7.0% of take-home pay ($4,687.50, estimated at 75% of gross pay), inside the 10% line.
Definitions
20/4/10 rule. At least 20% down, a loan of no more than 4 years, and total car costs under 10% of gross income. A widely quoted benchmark, not a rule anyone must follow.
Gross pay. Pay before tax and deductions. The 10% budget on this page is 10% of gross monthly pay.
Take-home pay. Pay after tax and deductions. The conservative budget line uses 10% of take-home pay, estimated here at 75% of gross pay.
Payment budget. The monthly budget minus running costs. What is left for the loan payment.
Running costs. Insurance, fuel and upkeep each month, before any payment. Sedan $296 a month on this page; SUV $335.
APR. Annual percentage rate, the yearly cost of borrowing before fees. Experian's Q2 2026 averages are 6.35% on a new car and 11.19% on a used car.
Credit tier. The band a credit score falls in. Experian's Q2 2026 averages run from 4.41% for super prime borrowers on a new car to 16.11% for deep subprime, and from 6.29% to 21.62% on a used car.
Out the door price. The car price plus sales tax and fees. On this page, the car price times 1.07 plus $900.
Three budgets, same income
One benchmark can hide how much room you actually have. The calculator now shows three side by side. Conservative takes 10% of take-home pay, which is the tightest read and the one that leaves the most room for everything else in life. Recommended is the 20/4/10 benchmark on this page, 10% of gross pay. Max stretches to 15% of gross pay, which buys a noticeably higher price and leaves less slack if insurance, fuel, or a repair moves. The conservative line uses an estimated take-home pay of 75% of gross pay, because tax and deductions vary by person. If you know your actual take-home pay, the conservative budget is simply 10% of that number. None of the three is a rule. They are three honest answers to the same question, so you can see what each one costs.
The benchmark at ten incomes
Same assumptions throughout: 20% down, 48 months, 8% APR, 7% sales tax, $900 in fees, sedan running costs $296 a month, SUV $335. Prices are rounded to the nearest $100 and marked "about", the three incomes from the examples above keep the page's own figures.
| Gross income / year | 10% monthly budget | Sedan: payment budget → price | SUV: payment budget → price |
|---|---|---|---|
| $30,000 | $250 | No car fits the benchmark | No car fits the benchmark |
| $40,000 | $333 | $37 → about $700 | No car fits the benchmark |
| $50,000 | $417 | $121 → about $4,600 | $82 → about $2,800 |
| $60,000 | $500 | $204 → about $8,600 | $165 → about $6,700 |
| $75,000 | $625 | $329 → about $14,500 | $290 → about $12,600 |
| $80,000 | $667 | $371 → about $16,400 | $332 → about $14,600 |
| $100,000 | $833 | $537 → about $24,300 | $498 → about $22,400 |
| $120,000 | $1,000 | $704 → about $32,100 | $665 → about $30,300 |
| $150,000 | $1,250 | $954 → about $43,900 | $915 → about $42,000 |
| $200,000 | $1,667 | $1,371 → about $63,500 | $1,332 → about $61,700 |
Where the benchmark comes from: 20/4/10 is a widely published guideline, not a rule from any single source, no one person or lender owns it. J.D. Power describes it the same way this page does (20% down, four years or less, total car costs under 10% of income). One honest disagreement to know about: some publishers anchor the 10% to take-home pay instead of gross pay, which gives a smaller budget. This page uses gross pay, all-in.
Read those against the average new car selling for $50,562 (Kelley Blue Book, September 2026) and the tension is obvious: under this benchmark, most households "afford" a used car or an entry-level new one. That is not a verdict on anyone's choices, it is what the arithmetic says when every cost is counted. It is also why the used market exists at the size it does, a point the new vs. used guide works through in full. On a tight budget, start with the best used cars under $10,000 and what they really cost to keep.
Where the benchmark gets stretched
The part of 20/4/10 that gives first is the 4. Stretch the same loan from 48 to 72 months and the payment drops while the car gets more expensive. Financing $13,476 at 8%:
- 48 months: $329 a month, $2,316 of interest.
- 72 months: $236 a month, $3,536 of interest.
The longer loan "saves" $93 a month and costs $1,221 more in interest, and it spends more of the car's life owing close to what the car is worth, because depreciation runs on its own schedule regardless of the loan. A lower payment and a cheaper car are two different things. Work out your own number, see how much your car payment will be.
Run it backwards from a car you are looking at
The other direction is just as useful. Take any car you are considering: run its price through the payment math, add insurance, fuel and a maintenance allowance, and compare the total with your monthly budget. If the total fits, the car fits, whatever the payment alone suggested. The calculator on this site does exactly that arithmetic over five years, including depreciation, which no payment quote ever shows. If keeping the total low is the whole point, start with the cheapest cars to own over five years.
If the quote is a buy here pay here quote, run its weekly payments through the buy here pay here calculator.
Common questions
What is the 20/4/10 rule for buying a car? A widely quoted benchmark: at least 20% down, a loan of no more than 4 years, and total car costs, payment, insurance, fuel, maintenance, under 10% of gross income.
Does the 10% include insurance and gas? In the strict version, yes. That is exactly why its results surprise people: on a typical sedan, insurance and fuel consume about $296 a month before any payment.
Why does a longer loan cost more if the payment is lower? Interest is charged on the balance for as long as it lasts. Financing $13,476 at 8% costs $2,316 over 48 months and $3,536 over 72 months, $1,221 more for the smaller payment.
Is the benchmark realistic at today's prices? With the average new car at $50,562 (Kelley Blue Book, September 2026), strict 20/4/10 points most incomes at used cars or entry-level new ones. Treat it as a measuring stick for the full cost, not a rule anyone must follow.
How expensive of a car can I afford? It comes down to your income and the whole monthly cost, not just the payment. Under the 20/4/10 benchmark on this page, a $75,000 income points at about a $14,500 sedan or a $12,600 SUV, and a $100,000 income at about a $24,300 sedan or a $22,400 SUV. Run any car you are looking at through the total, payment, insurance, fuel and upkeep, and compare that total with your budget.
Whatever price you are considering, run it through the five-year math, depreciation, insurance, fuel, maintenance, tax and interest, before comparing it with your budget. The payment is one line of six.
Related: already have a car in mind? Test it against the 15% line.
Related: new job or raise on the way? See whether the raise covers the car.
Related: Can the budget carry a second car? See whether a second car is worth it.
Related: The payment is not the only cash you need. See how much money you need on day one.
Related: Cash or finance changes what you can afford. See whether to pay cash or finance.