How Much Car Payment Can You Really Afford? (3 Simple Rules)

You might've heard of the 20/4/10 rule for car affordability, but this is my modified version (20/5/10). You don't have to take this advice, but I think it's a good start on how much your car payment should realistically be. Start with 20% down, don't exceed a 60 month loan and try to keep the monthly payment and car expenses below 10% of your net monthly income. So if you bring in $5,000 per month after taxes, then your car payment and added expenses should be about $500 per month (after 20% down). That's how I calculate car affordability.