The 20/4/10 rule is a generally accurate and helpful guideline when it comes to purchasing a car and determining how much of a down payment and monthly payment you can reasonably take on. This rule takes into consideration various aspects of your finances that impact your ability to purchase a vehicle and take on an auto loan. Down payment, length of loan, and budget The 20/4/10 rule states that when purchasing a car, the following should be true: ·       Your down payment should be 20% of the total cost of the car ·       The duration of your loan should be no longer than four years ·       Your monthly "transportation" spending should be no more than 10% of your monthly income This means that in addition to your car payment, the amount that you spend on maintenance, gasoline, electricity (if you purchase an electric vehicle), and repairs should not be more than 10% of your monthly income.