A general rule of thumb is to spend no more than 15% of your monthly take-home pay on a car payment, and no more than 20% on total transportation costs including insurance and fuel.

The 20/4/10 Rule

WISEIQ TOP PICK
PERSONAL LOANS
Upstart logoUpstart
Best for fair & thin credit · AI-powered approval
APR RANGE
7.80%–35.99%
LOAN AMOUNT
$1K–$50K
MIN. CREDIT
300
✓ No prepayment penalty ✓ Funds in 1 business day ✓ Soft pull pre-qualification ✓ Considers education & job history
Check My Rate →
No credit score impact
WiseIQ may earn a referral fee if you apply through this link. Rates shown are representative and may vary. See Upstart's website for full terms.

Financial experts recommend the 20/4/10 rule: put 20% down, finance for no more than 4 years, and keep total car expenses under 10% of gross income.

Frequently Asked Questions

What car can I afford on a $60,000 salary?

On a $60,000 salary, you can generally afford a car priced between $15,000 and $25,000, keeping monthly payments under $750.