Cadillac Financing 101: Understanding the 20/4/10 Rule

Part of securing the best Cadillac financing terms is knowing how much you can afford to spend on your vehicle each month. That’s why the 20/4/10 rule is an important benchmark for drivers looking to buy a new or pre-owned vehicle. Learn more about this rule in detail below, and contact Scott Cadillac with any other financing questions you may have.

20% Down Payment

The 20/4/10 rule refers to three figures to aim for with your Cadillac financing plan, starting with your down payment. It’s recommended that you put a down payment equal to 20% of the vehicle price at signing to help reduce principle and show your financial institution that you’re serious about car buying. You can put more money down if you’re able to, but 20% is a good goal to aim for.

Four-Year Terms

The second part of this rule refers to four-year terms, which is the recommended maximum length for financing terms. Financing your car in 48 months or fewer ensures that you aren’t paying too much in interest while also ensuring that your monthly payment fits within your budget. Longer financing terms may reduce your monthly premium, but you’ll pay more in interest over time.

10% Vehicle Operation Costs

Finally, you need to budget out enough money for monthly vehicle expenses. This includes financing costs as well as gas, oil, and any service and maintenance costs. You should avoid spending more than 10% of your monthly post-tax income on your vehicle.

Schedule a Cadillac Financing Appointment in Allentown, PA

Our dealership is ready to help you with Cadillac financing expertise, including budgeting and improving your credit score. Contact Scott Cadillac today to talk with our finance experts and get pre-approved for a loan.

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