What it does
Dealers will often tell you what monthly payment you can get. This tool works the other way round: it starts from your income and tells you the most you should spend, so the car does not squeeze the rest of your budget.
It uses the 20/4/10 rule of thumb. Put down 20% of the price, borrow for no more than 4 years, and keep all your car costs, the loan payment plus fuel, insurance and upkeep, under 10% of your gross income. After you have a price in mind, test a real offer with car loan, see the rest of your money in the budget planner, and compare owning with renting in lease or buy.
How to use it
- Type your gross income, before tax, and say whether it is per month or per year.
- Keep or change the down payment, loan length and share of income.
- Type the interest rate and what you expect to pay each month to run the car.
- Read the top price, the payment and the loan.
What each setting does
- Total car costs (% of gross income): your car budget a month is this share of your monthly gross income. The running costs come out of it first.
- Down payment (%): the loan is the price minus the down payment, so a bigger down payment allows a higher price for the same monthly payment.
- Loan length: a longer loan lowers the payment but costs more interest.
Worked example
Gross income 6,000 a month. Ten percent is 600. Take off 150 for running costs and 450 is left for the payment. At 7% over 48 months a payment of 450 repays a loan of about 18,792. With 20% down, that is 80% of the price, so the top price is about 23,490, with 4,698 down.
FAQs
Why gross and not take-home income? The rule was made with gross income because it is easy to compare. If you prefer, lower the share to suit your own take-home pay.
Are the running costs really that low? 150 is only a starting point. Fill in your own fuel, insurance and upkeep. If they are higher, the loan you can carry shrinks.
Is a bigger car possible? Only if you accept a longer loan, a lower down payment or a higher share of income. Each of those has a cost, which is why the rule exists.
Not financial advice.
Where the numbers come from
- The 20/4/10 rule is a common personal-finance rule of thumb, not a law or a lender's test. Loan size is the present value of the payments at the monthly rate (rate / 12), the same level-payment formula lenders use. Drawings are fibub's own.
Standard scientific values, such as constants, atomic weights and melting points, are facts found in every textbook; we name where ours were checked. If you are an author or publisher and want a value, a credit or a table changed or removed, tell us and we will act quickly.
Last updated 2026-11-10.