How much car can I afford? The 20/4/10 rule, worked out
This car affordability calculator turns your income into a car price using the popular 20/4/10 rule: put at least 20% down, borrow for no more than four years, and keep monthly car costs under 10% of your gross income. It works backwards from what you can pay each month to the loan that payment repays, then adds the down payment to give the most you should spend on the car.
It is a car affordability calculator based on income that works in rupees or dollars. Choose whether the 10% covers only the loan payment or insurance, fuel and maintenance too, add the cash you have for the down payment, and see how stretching the loan term changes the price and the interest. The rule is a rule of thumb, not financial advice — your own budget, savings and other loans matter more.
How to use the Car Affordability Calculator
- Pick ₹ or $ and enter your gross monthly income.
- Keep the rule’s 20% down, 4 years and 10% — or change them to see the effect.
- Enter the interest rate you expect from a lender.
- Choose what the 10% covers; if it includes running costs, enter insurance, fuel and maintenance a month.
- Optionally enter the cash you have for the down payment, then read the price, loan, EMI and interest.
Car Affordability Calculator features
Inverse EMI
From the monthly payment to the loan it repays, checked against the same EMI engine as the car loan calculator.
Rule check
Each part of 20/4/10 is marked within or outside the rule.
Cash cap
If your savings cover less than 20% of the income-based price, the price is capped by your cash.
Term comparison
The same payment over three to seven years: a longer loan buys a dearer car but costs far more interest.
How the calculation works
Monthly budget = income × 10%. If the 10% includes running costs, they are taken off first. The rest is the most you can pay each month, and the loan it repays is loan = payment × (1 − (1 + r)−n) ÷ r, where r is the monthly interest rate and n the number of months. The car price is that loan divided by 0.8, because the loan is the 80% you do not pay upfront.
Example: on ₹1,00,000 a month, 10% is ₹10,000. Take off ₹3,000 for insurance, fuel and service and ₹7,000 is left for the EMI. Over 48 months at 9% that repays a ₹2,81,293 loan, so the car can cost about ₹3,51,617, with ₹70,323 down and ₹54,707 of interest. Counting the EMI alone, the same income supports about ₹5,02,310. In dollars, $6,000 a month with $600 for the payment at 7.5% supports a car of about $31,019.
What the 20/4/10 rule means
- 20% down keeps the loan below the car’s value as it depreciates and cuts the interest.
- 4 years or less limits the interest and means the loan is paid off while the car is still worth something.
- 10% of gross income keeps the car from squeezing savings and other goals. Some versions count only the loan payment, others the total cost of running the car — the stricter version is the default here.
- Lenders in India judge you on all your EMIs against income instead; check yours with the debt-to-income ratio calculator.
Car price in India means the on-road price
In India, the price in this calculator is the on-road price — ex-showroom plus road tax, insurance, registration and TCS on cars over ₹10 lakh. Build it with the on-road price calculator, then plan the actual loan, tenure and schedule with the car loan calculator.
Car Affordability Calculator FAQ
How much car can I afford on my salary?
Under the 20/4/10 rule, spend no more than 10% of gross monthly income on the car and borrow for four years at most with 20% down. On ₹1 lakh a month at 9% that is a car of about ₹3.5 lakh if the 10% includes running costs, or about ₹5 lakh if it covers the EMI only.
What is the 20/4/10 rule for buying a car?
A rule of thumb: at least 20% down payment, a loan term of no more than 4 years, and total monthly car costs under 10% of gross income. It is guidance, not a lending rule.
Should the 10% include fuel and insurance?
Sources differ. Including running costs gives a safer budget; counting only the loan payment gives a higher price. The calculator lets you choose.
Is it better to take a longer loan to afford a better car?
A longer loan lowers the EMI or raises the price you can pay, but the interest grows and the car may be worth less than the loan for years. The term table shows the trade-off.
Is this financial advice?
No. It is an estimate based on a rule of thumb and the rate you enter.