While it’s more of a suggestion than an actual rule, the 20-4-10 Rule remains a helpful guide for used car financing. It’s designed to help you make the best financial decisions when financing a used car. We’re diving into all the details at Valley Chevrolet of Hastings.
The ‘20’
While it isn’t a must, the ‘20’ of the 20-4-10 means that you should aim to make a down payment of at least 20 percent. Generally, a down payment is designed to keep you from becoming upside down on your loan and limit how much you have to finance. So, it can be less for a used car. Your down payment can be reduced to 10 percent for a used car in certain conditions.
The ‘4’
The ‘4’ parameter of the 20-4-10 Rule applies to your loan term. Your loan term is the length of your auto loan. While it’s typically measured in months, the ‘4’ refers to years. If possible, you should keep your loan length under four years or 48 months.
The ‘10’
The ‘10’ refers to your auto expenses. You should keep your total monthly auto expenses under 10 percent of your monthly income when possible. This includes your car payment, as well as your auto insurance, your maintenance costs, your fuel, and the upkeep of your vehicle. We recommend using an auto payment calculator to estimate your auto payment and see if it fits your budget.
Apply for Used Car Financing in Hastings, MN
When done right, financing can be a valuable tool for your next vehicle purchase. We’re happy to help. Visit Valley Chevrolet of Hastings to apply for used car financing today!
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