Hyundai financing can sometimes feel overwhelming, especially if you’re a first-time buyer. However, the finance professionals here at Anaheim Hyundai make the process as smooth and stress-free as possible. One of the simple guidelines that we use to help local drivers is the 20/4/10 rule. This rule is designed to protect your monthly budget from getting stretched too thin—here’s what it entails.
A Strong Down Payment
The “20” in the 20/4/10 rule stands for making a 20 percent down payment on your vehicle at the time of purchase. This initial investment in the principal immediately reduces your balance, which in turn lowers the amount of interest you will pay over the life of the contract. When you put down more money upfront, you also avoid negative equity, which is a situation where you owe more on the car than it is currently worth.
Optimal Loan Term
Next, the “4” in the 20/4/10 rule suggests that you should limit your loan term to no more than four years, or 48 months. While you may find that a longer loan term offers a smaller monthly payment, the downside is that they result in higher interest costs and can keep you in debt for longer. A shorter loan ensures that you own your car outright sooner.
Total Monthly Expenses
Finally, the “10” refers to your total transportation costs not exceeding 10 percent of your gross monthly income. This figure includes more than just your car payment; it also includes insurance premiums, fuel costs, and regular maintenance.
Speak with Our Hyundai Financing Team in Anaheim, CA
Now that you understand the 20/4/10 rule, find a new Hyundai model that works for you here at Anaheim Hyundai. Our team of Hyundai finance professionals is ready to help with your financing plan. Visit us today!
