If you’re coming to our Chrysler financial department for an auto loan, you want to make sure that the monthly payments on it won’t be a major source of financial stress. One thing that might help is the “20/4/10 Rule,” a rule of thumb that can ensure a new car fits into your budget. Here’s what Griffin Chrysler Dodge Jeep® RAM customers need to know.
20: Down Payment
The 20/4/10 rule has three important parts. Let’s examine the first: the “20.” This concerns your down payment.
If you want to buy a car that fits your budget, try to put down no less than 20% of the total cost of the car as a down payment. If the sticker price is too high for you to do that, then it may be out of your price range.
4: Loan Term
Next, there’s the “four”, which represents your loan term. This is how long you should spend paying off the car. It can vary from two years to six years, but four years is the length that this rule recommends.
The longer the loan term, the lower the monthly payments, but the more you will end up paying in interest. You’re better off with a four-year term that leaves you with a monthly payment you can afford.
10: Monthly Income
Speaking of monthly payments, let’s talk “10.” This represents 10% of your monthly income, and that’s the maximum you should be spending on your monthly car-related costs. This includes not only your monthly car payment, but auto insurance, fuel costs, and maintenance, too.
Finance a New Car Today!
If you’re ready to finance a new Chrysler vehicle of your own, visit our dealership in Jefferson, WI. We’ll answer your questions about financing, and we’ll make it easy to find a car that fits your budget.
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