Drivers looking for Volvo cars for sale often have Volvo financial questions the experts in our Volvo financing center are always happy to answer. The 20/4/10 rule for buying an automobile is something our team is asked about often.
Motorists typically ask us to break down the rule, and they're normally curious about whether the guideline can be applied to both new and pre-owned vehicle purchases.
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Breaking Down the Rule's Parts
If you swing by our Volvo dealership near Jacksonville, NC, we'll decipher the 20/4/10 rule for you. As you can see, the rule consists of three parts. The 20 refers to the minimum amount of money you should put down when you purchase a vehicle. More specifically, the rule is advising you to put down 20 percent of a car's purchase price at least.
The four refers to the maximum amount of time over which you should finance your purchase, which is four years according to the 20/4/10 rule. If you adhere to the rule, you shouldn't devote more than 10 percent of your take-home pay to all your transportation expenses, including your monthly loan payments, fuel costs, auto insurance premiums, and maintenance and repair fees.
Let's say you want to buy one of the latest Volvo models from our location and the vehicle's MSRP is $40,000. Putting the 20/4/10 rule into practice, your down payment should be at least $8,000 and the term of your car loan shouldn't exceed four years or 48 months. If your monthly net income is $5,000, you can devote up to $500 to covering your cumulative monthly transportation costs.
Applying the Rule to Pre-Owned Vehicle Purchases
Do you want to get one of the Volvo Certified Pre-Owned vehicles on our lot or has one of our other previously owned cars caught your eye? In either case, you can apply the 20/4/10 rule to your upcoming purchase. The guideline is just as relevant and meaningful for people shopping for pre-owned models as it is for motorists who are in the market for a new automobile.
Whether you want to get a new or new-to-you Volvo vehicle, we'll help you apply the 20/4/10 rule to your impending purchase. Head over to Volvo Cars of New Bern to see all the Volvo models you can buy without breaking the 20/4/10 rule or over-stretching your budget. We look forward to seeing you at our convenient location soon!