Enter the car price of your wanted car ($) into the 20/4/10 Rule Calculator. The calculator will evaluate the down payment and minimum monthly income.
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20/4/10 Rule Formula
The following two example problems outline the steps and information needed to calculate the 20/4/10 Rule.
DP = CP * .20
MI = MC / .10
Variables:
- DP is the down payment ($)
- MI the minimum monthly income ($)
- MC is the monthly car cost on the 4 or less year loan ($)
- CP is the car price of wanted car ($)
The 20/4/10 rule states that you should be able to afford 20% of the down payment on a car and for the monthly cost to be less than 10% of your monthly income when a loan of 4 or less years is used.
How to Calculate 20/4/10 Rule?
The following steps outline how to calculate the 20/4/10 Rule.
- First, determine the car price of wanted car ($).
- Next, gather the formula from above = DP = P * .20.
- Finally, calculate the 20/4/10 Rule.
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem :
Use the following variables as an example problem to test your knowledge.
car price of wanted car ($) = 25,000
DP = P * .20 = ?
