MAZDA Financing Tips: How to Use the 20/4/10 Rule

With Mazda financing, many drivers can finally consider their dream car, even one they thought was out of reach. However, it’s important not to overextend yourself. The Autobarn Mazda of Evanston is outlining the 20/4/10 rule, which is a guideline for financing responsibly.

Your Down Payment

The “20” in the 20/4/10 rule refers to your down payment. Most experts agree that your down payment should be at least 20 percent of your purchase price. A large down payment can help offset the depreciation that new vehicles accumulate during their first year. This way, you don’t end up with negative equity, meaning you won’t owe more on your loan than your vehicle is worth.

Your Loan Term

The second parameter, the “4”, refers to your loan term. Your loan term is the length of your auto loan, which is often reflected in months, although “4” refers to years. If possible, your total loan term should be around four years long. This length strikes a healthy balance between shorter and longer terms, keeping your overall interest low without making your monthly payments too high.

Your Auto Expenses

The “10” is a guideline set for your auto expenses. You should try to keep your monthly auto expenses under 10 percent of your gross monthly income. Your auto expenses include every cost associated with owning a car, including your auto payment, auto insurance, maintenance costs, fuel, and registration. An auto payment calculator can give you a quick auto payment estimate so that you know what you can comfortably afford.

Apply for MAZDA Financing Using the 20/4/10 Rule in Evanston, IL

Our Mazda financing application process is short and sweet. You simply need to answer a few questions about your employment and housing, and we’ll get to work on finding a competitive loan for you. Visit The Autobarn Mazda of Evanston to get started today!