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20/4/10 Car Affordability
Use the 20/4/10 rule to check if a car purchase is within your financial means — 20% down payment, 4-year loan, EMI ≤10% of income.
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About the 20/4/10 Car Affordability
What is it?
The 20/4/10 rule is a car-buying guideline: put at least 20% down, finance for no more than 4 years, and keep total transportation costs (EMI + insurance + fuel) under 10% of gross monthly income.
When to use
Use it before buying a new or used car to quickly assess whether the purchase fits your budget without stretching your finances.
When NOT to use
If you live in a city with excellent public transport, this rule may not apply. Also, it assumes you don't have other high-interest debt that should be paid first.