Figuring Out What You Can Afford: An Auto Loan Payment Lesson by Borton Volvo Cars

When people have struggles with their auto loan or lease payment, it is often because they took on a payment that they can’t afford. There are other reasons someone could be having trouble, but, in many cases, it was a matter of a payment not being factored into the individual’s monthly budget correctly. The finance department at Borton Volvo Cars, located at 905 Hampshire Ave S in Golden Valley, MN, has helped many residents from the St. Paul, MN area determine how they can most effectively budget in an auto loan or lease payment and be effective in paying it back.

The 20/4/10 Rule

Wouldn’t it be great if there was a guideline to keep you from taking on an auto loan or lease payment you can’t afford? The good news is that there is such a guideline! Minnetonka, MN customers will be happy to know that the 20/4/10 rule can help keep them out of financial trouble and help kickstart them into working their vehicle payment into their budget. Despite it being called a rule, it is not that rigid. It is an excellent way of preventing trouble before it happens.

The first part of the 20/4/10 rule states that an Eden Prairie, MN customer should always put 20 percent of the purchase price down. With this rule, if the car costs $20,000, you would be expected to put down $4000. The second part of the rule states that you should finance a vehicle for no longer than four years. By keeping your loan term short, you will lower the amount of interest you pay and reduce the overall cost of your loan. Lastly, the 10 part of the rule relays that a customer should keep their total monthly vehicle costs to 10 percent or under of their gross income. This will give the customer some buffer in case they receive an unexpected expense that makes the monthly budget tighter.

We Want You to Be Successful

By implementing the 20/4/10 rule, our customers will be able to determine what they can afford and Borton Volvo Cars, in Golden Valley, MN, wants everyone to be successful in repaying their loan or lease agreement. Give our finance team a call, or come into our dealership, and let us help you budget your next Volvo vehicle today!

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