Shreyaa Kapoor Instagram – Planning on buying a car anytime soon? 🚙
Well then this rule might just be the directional answer you need – 20/4/10 rule! 🌟
This rule suggests you can afford a car if you can meet the following three requirements:
-You can make a down payment of 20% or more when purchasing the car 🌱
-You can take out a car loan with a term of four years or less 🙏🏼
-You can have your total transportation costs—not just your car loan—be less than 10% of your monthly income🌟
This rule is helpful as it makes sure you can afford a down payment on the car. This is important because new cars begin to depreciate when you drive them off the lot. Without a decent down payment, you may immediately end up upside down on your car loan.🫡
A four-year car loan can help you limit the interest you pay because you’d pay off the loan relatively quickly. Finally, keeping your total transportation costs to less than 10% of your monthly income can help ensure a car doesn’t dominate your budget and leaves room for other expenses.🙌🏼
Please know that this is not a one size fits all rule so things can vary given your specific situation – however this is a good guideline to follow to know that you are not over stretching yourself when buying a car!🫶🏼
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[car loan, car tips, new car, loan tips, personal finance, finance tips, 20/10/4, before you buy a car] | Posted on 20/Jul/2024 19:00:11
