How Much Should You Pay for Your First Car?

Date: Oct 29, 2026

The best way to gauge how much you should pay for your first car is based on earnings, and a common guide is to keep total transportation costs near 10% of your income. That includes the payment, insurance, gas, and maintenance.

The 20/4/10 Rule

The 20/4/10 rule suggests putting 20% down, financing for no more than four years, and keeping transportation costs below 10% of gross income. Some variations of this rule use take-home pay instead. It is a guide, not a requirement.

For example, with $5,000 monthly income, 10% is $500. Subtract $70 for gas, $70 for parking, $80 for insurance, and $80 for upkeep, and about $200 is left for a payment.

Before You Buy

• Get an insurance quote first
• Add up fuel and upkeep, not just the payment
• Compare loan terms and interest rates
• Consider whether you need a car right now