There's an old test for whether you can actually afford a car. Put 20% down, finance for no more than four years and keep everything the car costs you — payment, insurance, fuel, maintenance — under 10% of your gross income. That's the 20-4-10 rule, and financial planners have abided by it for decades (1).
The problem is passing that test isn't so easy anymore. According to a new CNBC ****** ysis, you'd need to earn about $120,000 a year to afford an average used car under this rule (2). For context, the median U.S. household earned $83,730 in 2024, according to the U.S. Census Bureau (3). In other words, an affordability rule that was meant for ordinary car buyers now ****** umes an income most people don't earn.
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