Using the 20-4-10 Rule for Mercedes-Benz Financing

When it comes to time to work with our Mercedes-Benz financing team here at Mercedes-Benz of Los Angeles, using the 20-4-10 rule is an excellent way to ensure that you make a sound financing decision. Whether you wish to finance a Mercedes-Benz SUV, a coupe, or a sedan, the 20-4-10 rule can help you save money in the long run. Here’s an overview of how it works from the Mercedes-Benz of Los Angeles team.

The 20-4-10 Rule Explained

The 20-4-10 rule suggests leaving a 20 percent down payment, financing for no more than four years, and keeping total monthly vehicle expenses, which includes insurance and maintenance, under 10 percent of your gross income. Let’s take a closer look at the rationale behind the numbers.

20 Percent Down Payment

Putting down a significant down payment, ideally 20 percent of the vehicle’s purchase price, helps to reduce your monthly payments and the overall cost of financing. It also demonstrates to lenders that you are financially stable, potentially leading to better loan terms.

4-Year Financing Term

Limiting your financing term to no more than four years helps you avoid being upside down on your loan, where you owe more than the car is worth. It also minimizes interest expenses and ensures you’re not paying for a depreciating asset longer than necessary.

10 Percent of Total Monthly Expenses

Finally, keeping your total monthly vehicle expenses, insurance premiums, and maintenance costs under 10 percent of your gross income ensures that your Mercedes-Benz car remains an affordable luxury. This guideline helps prevent financial strain and ensures you can comfortably afford your vehicle.

Finance Your Mercedes-Benz Car in Los Angeles, CA

Now that you know why the 20-4-10 rule is a trusted guideline for Mercedes-Benz financing, get the ball rolling on your loan here at Mercedes-Benz of Los Angeles. Stop by today to check out our inventory!