Nissan Financing: The 20/4/10 Rule

The entire Nissan financing process can be daunting for new buyers, but we’re here to put your worries at rest. Buying a car is a purchase that marks a huge step forward and should be taken seriously. One way you can plan for such a big transaction is a framework called the “20/4/10” rule, which helps buyers get ahead of the financing process.

What Is the 20/4/10 Rule?

The 20/4/10 rule is less of a concrete rule, and more like general guidelines for the vehicle buying process. The rule goes that you should take out a four-year loan and put 20% down at the time of purchase, after which you should spend no more than 10% of your monthly income on vehicle expenses. Those expenses include loan payments, fuel, and your insurance bill.

Applying The 20/4/10 Rule

This formula can be applied when shopping to give potential buyers an idea of what they can realistically afford. When considering a vehicle, think about its asking price, and consider if you could save up 20% of that.

Even if you can afford to put 20% down, consider whether or not the remaining balance of the loan can be paid off in four years using only 10% of your monthly income. Remember that this is not a concrete rule that buyers must abide by, but if you don’t think you can afford a vehicle with only 10% of your income then you may want to consider other options.

Do you need help applying the 20/4/10 rule to your vehicle search? Reach out to Woodhouse Nissan Bellevue today and our finance department would be happy to help! You may be surprised at how straightforward this formula can make buying a vehicle, so don’t hesitate to reach out today.