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Interest Rate

Term (Months)

Monthly Payment
(% of pay after living expenses

Monthly Payment ($)

Total Loan

Down Payment

The Maximum Price You
Should Pay For A Car is..

Note: This is a MAXIMUM, you should
always target below this

An effective and commonly employed rule of thumb for buying a car is to limit your monthly payments to 10% of your annual salary, this places an effective constraint on the total amount you can spend on a car such that you can comfortably afford your monthly payments.

However, this fails to account for other key expenses, such as rent, mortgage or personal debt payments

This calculator shows the maximum you can afford to pay for a car (based on this core 10% rule), after adjusting for these other key monthly expenses

The three key rules for car affordability are:

  • 1. Limit the length of your car loan to 4 years (48 months)
  • 2. Monthly payment should not exceed 10% of income
  • 3. Always have at least a 20% downpayment

icon1The 4 / 10 / 20 rule

About The Author


Aaron graduated with a degree in accounting from San Diego State University. He's since been working for SellMax calculating the value of used cars. Aaron commonly sees individuals making the same mistakes when buying a car. This guide is his response in hopes to better the financial situation of the general public.