Don't Fall For Trap, Remember 20-4-10 Rule For Car Purchase; Thank Us Later

Lakshya Rana
May 27, 2024

20-4-10 Rule

It's a financial guideline, that will help you to make smart decisions when purchasing a car.

20% Down Payment

According to the 20-4-10 Rule, one should put down at least 20% of the car’s purchase price upfront. This reduces the amount you need to finance, lowering EMI and interest.

4-Year Loan Term

Opt for a loan term no longer than 4 years (48 months), lowering the overall interest amount and ensuring you pay off the car faster.

10% of Monthly Income

The rule says, keep your total monthly car expenses, including EMI, insurance, fuel, and regular maintenance, within 10% of your gross monthly income.

Financial Flexibility

Adhering to the 10% rule ensures you have enough income left for other expenses and savings, maintaining overall financial health.

Financial Stability

Following the 20-4-10 rule helps maintain long-term financial stability.

20-4-10 Rule

The 20-4-10 rule ensures you can comfortably afford your car without sacrificing other financial goals.

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