Signing up for a Ford financing offer means knowing how much money to put aside. The 20-4-10 rule is a great way to understand your financing power and determine your maximum monthly limit for vehicle payments. Learn how to use the 20-4-10 rule for Ford financing at O’Brien Ford of Shelbyville.
20% Down Payment
The first part of the 20-4-10 rule is about down payments; generally, you should put a 20% down payment on your Ford financing plan. This will significantly reduce your immediate principal and lower your monthly payment. If you can pay even more than 20% of the purchase price at the start of your plan, then feel free to do so; the more you pay upfront, the less you’ll pay each month.
Four-Year Loan Term
For the second part, drivers should stick to payment terms of four years or less when seeking financing plans. While longer financing terms might reduce your monthly payment, you’ll ultimately pay a lot more in interest over the length of your financing. Securing a financing offer of four years or less gives you a good balance between monthly payments and interest accrual.
10% of Monthly Income
The last part of this rule refers to how much of your monthly income should be reserved for Ford financing. You shouldn’t use more than 10% of your monthly income towards your financing plan; this keeps your finances stable while you pay off your debt. As with other aspects of the 20-4-10 rule, this is merely a guideline — but it’s there to ensure you don’t go overboard on your payments.
Learn More About Ford Financing in Shelbyville, KY
Our Ford financing team is ready to help you with any finance and leasing questions you have. Contact O’Brien Ford of Shelbyville today to learn about the intricate financing details and for assistance starting your loan or lease. We look forward to helping you!
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