Car Affordability Calculator
Rates verified Nov 2026 · Sources: CRA, Service Canada
Example$5,500/mo income · 20% down · 48-month term · 6.99% rate · Ontario
Max Vehicle Price
Loan Payment
$625/mo
$288 bi-weekly
All-In Monthly
$1,160/mo
$535 bi-weekly · incl. operating
Operating Costs
$535/mo
insurance + fuel + upkeep
Loan vs. Income
27.8%
of take-home · target ≤ 15%
Amount to Finance
$31,574
Consider saving for a 20% down payment to avoid negative equity risk.
The 20/4/10 rule is widely considered outdated - RateHub.ca and Driving.ca recommend 15–20% of take-home as the realistic benchmark for most Canadians in 2026.
What's Next?
Estimates only. Take-home pay is estimated and may differ based on your actual deductions. EV rebates subject to eligibility, MSRP thresholds, and dealer enrollment in EVAP. Provincial rebates subject to availability - confirm with your dealer. Methods based on Driving.ca and RateHub.ca guidance (2026). Not financial advice.
Keep your numbers moving
Jump into related tools with your next best calculation.
About this calculator
Updated November 2026The 20/4/10 rule is the classic Canadian guideline for buying a car without becoming car-poor: 20% minimum down payment, 4 years maximum financing term, and total transportation costs (loan payment + insurance + fuel + maintenance) under 10% of your gross monthly income. This calculator checks all three at once and tells you the maximum vehicle price you can comfortably afford.
What you can do with it
- Find the price ceiling that keeps you within a safe financial zone.
- Compare new vs used - used cars almost always pass 20/4/10 more easily.
- See how insurance in BC or Ontario crowds out your actual loan payment budget.
- Avoid 7- and 8-year auto loans that trap you in negative equity for years.
The 20/4/10 rule explained, with a worked example
The tool solves for the vehicle price where: down payment = 20% of price, loan term = 48 months at current rate, and (monthly loan payment + insurance + fuel + maintenance) ≤ 10% of your gross monthly income. It uses province-specific insurance and fuel assumptions you can adjust. Worked example: on a $75,000 salary, 10% of gross monthly income is $625. If insurance and fuel take about $300, about $325/month is left for the loan. Over 48 months at 6.5%, that repays about $13,700, which with 20% down is a vehicle of about $17,000 before sales tax. The 4-year cap matters too: a $28,000 loan at 6.5% costs about $664/month and $3,900 in interest over 4 years, versus about $416/month but $6,900 in interest over 7 years.
Canadian context - 2026
Average Canadian new-car price in 2026 is around $68,000 - roughly 2× the pre-pandemic average. A household earning $120,000/year gross can safely afford roughly $1,000/month in total transport spend, which translates to a $28,000–$35,000 vehicle depending on province.
Official sources
- CRA: GST/HST rates by province (checked 2026-10-10)
Frequently asked questions
What is the 20/4/10 rule for buying a car?
The 20/4/10 rule recommends putting at least 20% down, financing for no longer than 4 years, and keeping total vehicle costs (payment, insurance, gas) under 10% of gross monthly income. It is a widely used guideline to avoid being car-poor.
How much should I spend on a car in Canada?
Financial planners generally suggest keeping your total vehicle payment plus insurance under 10–15% of your take-home pay. For a household earning $80,000 net, that is roughly $650–$1,000 per month. Use the affordability calculator to find your number based on your actual income and province.
Should I buy new or used?
New vehicles offer warranties and the latest safety features but depreciate 15–25% in the first year. Used vehicles lose less value immediately and often cost less to insure. The 20/4/10 rule applies to both; the calculator can compare the budget impact of different price points.
How much car can I afford on a $75,000 salary?
Under the 20/4/10 rule, total vehicle costs should stay under 10% of gross monthly income: $625/month on $75,000. If insurance and gas take about $300, about $325/month is left for the loan payment. Over 4 years at about 6.5%, that pays off roughly $13,700, which with 20% down is a vehicle of about $17,000 before sales tax.