Understanding the 20/4/10 Rule for Car Financing

Here at Lincoln of New Bern, we believe the Lincoln financing process should be as smooth and easy as possible, so you can focus on picking out the luxury performance vehicle you really love. That's why we offer easy-to-use financing tools and resources, like an online finance application and vehicle trade-in value estimator, and why we're sharing financing guidelines like the 20/4/10 rule.

20/4/10 Rule Explained

The more you know about the vehicle financing process, the easier it will be to take home the right new or pre-owned Lincoln vehicle that fits your lifestyle. That's where the 20/4/10 rule can really help. Here's the breakdown of this financing guideline and how it can best work for you.

20 Explained

One of the things you want to consider when purchasing your next vehicle is the down payment. The larger your down payment, the smaller your monthly payments, and the more quickly you'll be able to pay off your loan. According to the 20/4/10 rule, you'll want to make a down payment that is 20 percent of the total new Lincoln cost.

4 Explained

The monthly payment for your vehicle is determined by dividing the total vehicle cost by the term length in months, which is why it's important to pick a term length that fits your budget. Longer terms can have a higher interest rate, but you also want to make sure you can make your vehicle payment every month.

That's why the 20/4/10 guideline recommends a four-year term. Remember, you can always pay off your new Lincoln vehicle early.

10 Explained

The 10 in the 20/4/10 rule looks at your overall transportation costs for the month. This includes vehicle payment, as well as fuel costs, insurance, and any costs for Lincoln service or parts. The 20/4/10 guideline says that your total monthly transportation costs should be no higher than 10 percent of your monthly income.

Learn More at Lincoln of New Bern

It's easy to begin setting your new vehicle budget with the support of Lincoln of New Bern and the 20/4/10 rule. Sit down with our expert financing team to get your questions answered and the financing support you need, and explore our specials and deals to save big on the perfect car. Take your first test drive at our Lincoln dealership today.