If you're getting ready to take out a car loan, an old rule about financing might be helpful to you. Here at Helfman Alfa Romeo of Houston, our Alfa Romeo finance department has heard more than a few drivers mention the 20/4/10 rule. If you're curious about how it can help you pick out a car that suits your budget, here's what you need to know.
What the Numbers Mean
The first number, 20, is for the down payment on the car. You should put down 20 percent when you buy a new vehicle and finance the rest. You could always make a larger down payment as well, but this rule ensures that you're not putting too little down and taking out a larger loan than necessary.
Then there's the four. This represents your loan term, or how long you're taking to pay off your vehicle. Loan terms can vary in length, with some lasting for as long as six years. The longer your term, the more interest you pay though. So, four years is a good length of time for the budget-conscious car shopper.
Finally, there's the 10. This is how much of your monthly income you should spend on transportation costs, reflected as a percentage. Now it's important to note that your car payment isn't the only cost to think about. There are also your insurance premiums and the cost of fuel.
You also have to remember maintenance costs. Do the math and make sure that a new car won't overstretch you financially.
Finance Your New Alfa Romeo Car Today!
If you're ready to finance a new Alfa Romeo car of your own, don't delay. Visit our luxury car dealership serving Pearland, TX and talk to our knowledgeable dealers and financing experts. We're ready to assist you!
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