When budgeting for a new car, it's important to have a clear plan in place. Sticking to guidelines can help make the financing process simpler and ensure you don’t overspend. If you’re looking into Subaru finance options, the 20/4/10 rule is a great way to structure your purchase for long-term affordability at Zeigler Subaru of Kenosha.
20-Percent Down Payment
To get the most out of your Subaru finance plan, it’s recommended to make a down payment that’s 20 percent of the vehicle’s total cost. This upfront investment lowers the amount you need to borrow, which in turn reduces your monthly payments. A larger down payment also means you’ll pay less in interest, saving you money over time.
4-Year Loan Term
While it may be tempting to stretch your loan out over a longer period to lower your monthly payments, the ideal loan term is four years. Shorter loan terms will cost you less in interest over time, but they also mean you'll have higher payments each month. In contrast, longer loan terms might give you lower monthly payments but will cost you more in interest. Staying within a four-year window strikes a balance between these two areas.
10-Percent of Total Income
Another important guideline is that your total monthly vehicle expenses should not exceed 10 percent of your income. This includes not just the car payment, but also things like fuel, insurance, and maintenance costs. Adhering to this guideline helps ensure your car expenses don't stretch your overall budget too thin.
Get Started with Subaru Finance in Kenosha, WI
By following the 20/4/10 rule, you can enjoy a smooth, stress-free car-buying experience. Visit Zeigler Subaru of Kenosha today to explore your options and start your Subaru finance journey!
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