What is the 20 4 rule for buying a car?
The 20/4/10 Rule at a Glance The rule is quite simple: put at least a 20 percent down payment on the vehicle purchase, aim for a loan term no more than 48 months, or four years, and keep the sum of vehicle-related expenses no more than 10 percent of your monthly income. The ’20/4/10 rule’ is a rule for buying a car you can follow where you make a 20% down payment, a 4-year loan tenure, and keep car expenses within 10% of your income.The 20/3/8 rule is a guideline that suggests you put 20% down on a car and repay the loan over three years. Applying the rule correctly will also require your monthly payment and car expenses be 8% or less of your income.
What is the 8% rule for a car?
The 20/3/8 rule is a guideline that suggests you put 20% down on a car and repay the loan over three years. Applying the rule correctly will also require your monthly payment and car expenses be 8% or less of your income. I recommend a general rule of thumb if you are financing, called the 20-4-7 rule. Annual loan payment is no more than 7% of your gross income.