The 20/4/10 Rule for RAM Financing

If you plan to buy a new or used RAM truck, chances are good that you will be financing the purchase. And so you don’t want to overextend yourself, there’s a very helpful rule you should follow. Here you’ll learn how to apply this for your RAM financing:

Start with the Down Payment

One of the first things to think about when buying a car is how much you can put down right away. Getting as close as you can to 20 percent of the sale price is a good idea. First of all, this takes quite a bit off the loan you will need. Plus, it could result in a smaller interest rate.

Move on to the Loan Term

The loan term is the length of time you’ll have to pay back the money, and you should aim for four years. If you choose a term shorter than this, your monthly payments will rise considerably. If you go longer than four years, your interest payments will really add up.

End with Your Monthly Income

To figure out how much you can comfortably pay for your car every month, look at your overall income. Your transportation costs should be no more than 10 percent of your takehome. Be sure to factor in things like gas and insurance along with the car payments.

At Woodhouse Chrysler Jeep® Dodge Sioux City, we understand that financing can be confusing. If you need help determining how much you should be spending on your car, feel free to get in touch with our financing department. Or, if you’re ready to start the process, you can fill out our online application.