20/4/10: Are Your Car Expenses Keeping You on Budget?

No other car dealer near St. Louis talks about car loans and budgeting as much as we do; because at AutoCenters, we're not looking to make money. We're looking to make relationships with drivers all over Missouri.

And a great relationship is based on working together.

Which is why we're committed to working with our clients to find the vehicles and the deals that are really going to work for them.

So, to help you find a car that you can really afford--without having to cut out the little things in life--we're going to take a look this week at the "20/4/10 rule".

(Well, more like a guideline.)
 

20: Percentage of Car Price You Should Put Down

Ideally, you should be able to have enough money saved up for a 20% downpayment on the car, truck, or SUV that you're looking for. This will not only save you a lot of money in the long term, being able to put 20% down is usually a good indication that you won't have much of a problem making the monthly payments on the remaining amount.

4: Maximum Recommended Number of Years for a Loan Term

While we can--and have--helped drivers create an auto loan plan that stretches to 5, 6, or even 7 years, the longer your loan, the longer you're making interest payments. And if you had bad credit or no credit and don't qualify for those really low financing rates, even an extra year of payments could mean a few hundred dollars more in interest. Aim for an auto loan term of 4 years (48 months) or less.

10: Percentage of Income (or Less) Spent on TOTAL Car Loan/Insurance Expenses

This one might be a little tough, but if you can follow this specific recommendation, you're golden. Look at how much you make per month (salary/tips/added income, etc.) and find ten perfect of that whole income. Will your car payment plus car insurance for you and any other drivers on the plan be equal to or less than that number? If not, you may want to shop for a more budget-friendly vehicle.

How Much Can I Pay for a Car?

If you want to learn more about this helpful guideline, or see an example of how it works, click the link above.

But, if you know that you're ready to make the move toward smarter car-buying, explore our all-credit auto financing near St. Louis to find the solution that's going to work for you.