Financing a vehicle can be a very complicated process. While there is no single car buying rule that accounts for every possible avenue you can traverse, the 20/4/10 rule can help buyers get a good footing. Let’s learn how this rule can help you secure your next Lincoln vehicle.
What Is the 20/4/10 Rule?
The 20/4/10 rule is a general theory that drivers can apply to budget for their next vehicle. The rule states that you should put down around 20% of the total value of the car. It also advises that your loan term should be no more than four years, during which you should pay no more than 10% of your monthly income on vehicle-related expenses.
Of course, you don’t have to follow these numbers to a T — this rule is aimed more at giving you an idea of how to plan for your next big vehicle purchase. Given your current income, the 20/4/10 can give you a rough estimate of your maximum budget and how much you would have to save for a new Lincoln car down payment and monthly expenses.
Applying the 20/4/10 Rule
To apply this rule, you need to know two different pieces of information: the price of the vehicle you are interested in, and your total monthly income. Consider whether or not a 20% down payment is feasible for you, as well as whether you can keep car-related expenses — including car payments, gas, and repairs — under 10% of your monthly income over the course of the lease.
Pursuing a vehicle that fits this framework means that you’ll be setting yourself up for success by assuming the least risk during the term of your loan. Make sure to shop around for a vehicle that suits these factors.
If you have any lingering questions, be sure to reach out to the Woodhouse Lincoln finance department. And don’t forget to stop by and take a look at our selection of new and pre-owned Lincoln vehicles!
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Finance