Understanding the 20/4/10 Rule for Jeep® Financing

Do you have plans to purchase a new Jeep® vehicle this summer? Our Jeep financing center in Elkader, IA can help. One piece of advice from our finance experts: follow the tried-and-true 20/4/10 rule to manage your budget 

20: Your Minimum Down Payment 

20% is the minimum down payment you should strive for. The higher the down payment, the lower the repayment term (something we’ll discuss later), meaning you’ll pay a smaller interest rate in the long run. Aim for a vehicle model and trim that you can put 20% or more down on. 

And never rule out pre-owned vehicles! If it helps you reach the 20% threshold, consider a used or certified pre-owned car. A pre-owned car just one year old can be much more affordable than this year’s model, with minimal differences.  

4: Your Maximum Repayment Term 

Four is the maximum number of years you should keep your repayment term. Other common loan repayment terms include five, six, and seven years. However, if you aim for these longer terms, the interest rate will accumulate while there’s more time for depreciation to diminish the car’s value.  

Remember: investing a larger amount initially (through a 20%+ down payment) will help you keep your repayment term short. 

10: Your Maximum Income Allotment 

10% of your gross income is the maximum amount you should allot to your car payments. This 10% includes all car-related costs, including insurance and gasoline. It’s especially important that you don’t go over 10% if you also have other payment commitments, such as rent or another car.  

Visit Brown’s Elkader Chrysler Dodge Jeep RAM and browse our inventory for models like the Jeep Renegade. We understand a vehicle purchase is a large financial undertaking; our dedicated finance staff can walk you through every step of the process.