If you're confused about the whole Lincoln financing process, the 20/4/10 formula can help you get a handle on what to expect. It can be difficult to know exactly what to plan for and how much to save up, but this quick guide can help you figure that out. Let's take a look at what the 20/4/10 rule actually is, and how you can go about applying it to your car buying process.
First and foremost, the 20/4/10 rule is not a law. It's more like general guidelines and a way to plan for vehicle expenses. Basically, the rule goes that you provide a down payment of 20% of the balance, sign a loan for a four-year period, and pay no more than 10% of your monthly income on car expenses.
These expenses include any money you put towards your new vehicle, including gas, insurance, and loan payments.
When perusing our selection of available vehicles, take a moment to consider each one's asking price. Could you realistically save up for a 20% down payment, and if so, is 10% of your income enough to cover the monthly costs?
If your loan period is four years, and only 10% of your monthly income can be spent on your vehicle, could you pay off the balance in time? Be sure to remember that while your loan payments will stay consistent, fuel and insurance costs may shift over the course of your loan period.
Now that you know all about budgeting for your next vehicle, why not stop by Woodhouse Lincoln to check out our selection of vehicles? Figure out which vehicle you want to budget for, then make your way down to test drive it in person today.
20% down — be able to pay 20% or more of the total purchase price up front. 4-year loan — be able to pay off the balance in 48 months or fewer. 10% of your income — your total monthly auto costs (including insurance, gas, maintenance, and car payments) should be 10% or less of your monthly income.
It suggests that you should do the following: Make a down payment of at least 20% of the car's purchase price. Finance the car for no longer than four years. Ensure that your total car expenses, including loan payments, insurance and fuel, do not exceed 10% of your gross annual income.
Remembering that total car costs include insurance, maintenance and gas (not to mention parking and traffic tickets!), if you can manage to spend only one-tenth of your gross income on a new-to-you car, the financial benefits are plentiful.
It consists of three parts: a down payment of at least 20% of the car's price, limiting the loan term to three years, and ensuring that your car payment does not exceed 8% of your monthly income. This Rule is not just about numbers; it's a strategic approach to avoid financial strain due to an auto loan.
50% for needs like housing, food, and transportation. In this case, the monthly car payment and other related auto expenses fit into this category. 30% for wants like entertainment, travel, and other nonessential items. 20% for savings, paying off credit cards, and meeting long-term financial goals.
Introduction: My name is Mr. See Jast, I am a open, jolly, gorgeous, courageous, inexpensive, friendly, homely person who loves writing and wants to share my knowledge and understanding with you.
We notice you're using an ad blocker
Without advertising income, we can't keep making this site awesome for you.
