Dealers quote a weekly payment. The payment is not the cost. The rule that protects you is simple enough to do in your head.
Why each number is there
20% down keeps you from going underwater. A new vehicle loses roughly 20% of its value in the first year, so a small down payment on an eighty-four month term means years of owing more than the car is worth.
Four years is a discipline test. If the payment only works over seven years, the vehicle is too expensive — you are simply spreading it far enough to hide that.
Ten percent covers everything, not just the loan: insurance, fuel, maintenance, tires and the provincial sales tax you paid at purchase. On $90,000 of gross income that is $750 a month for the whole category.
Run it on your own numbersVehicle affordabilityThe 20/4/10 rule turned into a maximum sticker price and a scorecard.The tax nobody budgets for
Sales tax on a vehicle is charged on the full price, and it varies more than buyers expect: 5% in Alberta, 13% in Ontario, 14.975% in Quebec, 15% in the Atlantic provinces. On a $45,000 vehicle that is a spread of over $4,400 between provinces.
| Province | Rate | Tax |
|---|---|---|
| Alberta | 5% | $2,250 |
| Ontario | 13% | $5,850 |
| Quebec | 14.975% | $6,739 |
| Nova Scotia | 14% | $6,300 |
New, used, or lease
A two-to-three-year-old vehicle has already taken the steepest depreciation and often still carries powertrain warranty. Leasing makes sense if you genuinely replace vehicles every three years and stay inside the kilometre allowance; otherwise you are renting the most expensive years of the car’s life, repeatedly.
Run it on your own numbersVehicle paymentCompare finance, lease and cash on five-year total cost.Written against published 2026 federal and provincial figures. General information, not financial, tax, or legal advice — see the methodology and disclaimer.