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However, following specific car-buying guidelines can help keep car ownership affordable.
The 20/3/8 Car-Buying Rule
The first rule Stephan said comes from MoneyGuy.com.
Heres how the 20/3/8 rule works.
Put 20% Down
A 20% down payment will reduce the amount you must finance.
Stephan said you may get a better loan rate by borrowing less as well.
Youll pay less interest over a 36-month loan than with thecurrent average termof 66.4 months.
MoneyGuy.comsaid you should dedicate the entire 8% to the loan payment.
20/3/8 Rule Examples
Suppose you make $50,000 a year or $4,166 per month.
That means finding a car thats worth about $13,800 and making a down payment of around $2,760.
The 20/4/10 Car-Buying Rule
The 20/4/10 rule is similar to the 20/3/8 rule.
It also requires a 20% down payment, but the loan is for four rather than three years.
Whichever car-buying rule you choose, the goal is to spend no more than you might afford.
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