Understanding the 20/4/10 Rule for Alfa Romeo Financing

When buying an Alfa Romeo car, you have many different options. However, no matter which model or type of Alfa Romeo car you choose, the fact of the matter is that you’re going to have to find a way to pay for it. Most buyers choose to finance, and our Alfa Romeo financing experts would like to share the 20/4/10 rule, which is useful for many buyers when choosing a budget.

What is the 20/4/10 Rule for Alfa Romeo Financing?

The 20/4/10 rule suggests that you can afford a car if you can meet the following three criteria:

• You can make a down payment of 20 percent or more when purchasing a car.
• You can afford to take out a car loan with a term of four years or less.
• You can have your total transportation costs – not just your car loan – make up less than 10 percent of your monthly income.

Putting the Rule into Practice

The 20/4/10 rule can be better understood when it is put into a practical application. Say, for instance, you wish to purchase a new Alfa Romeo car that costs $30,000. First, you would calculate a 20 percent down payment, which equals $6,000.

This leaves a balance of $24,000 to finance with a four-year loan at a 4.37 interest rate. Doing the math, this results in a monthly payment of around $546. Next, you would calculate other transportation costs, to make sure it doesn’t add up to more than 10% of your income. These include:

• Insurance
• Maintenance
• Taxes and fees
• Fuel
• Loan payment

For more information about the 20/4/10 rule, do not hesitate to reach out to our professional Alfa Romeo finance team.