When it comes to the Toyota finance process, our team here at Heritage Toyota Owings Mills has your back. We believe financing your next vehicle should be simple and easy, so you can focus on picking out the car you like best. That’s why we’re sharing everything you need to know about the vehicle finance journey, including best down payment practices.
What is a Down Payment?
Quite simply, a down payment is the amount of money you give the dealership the day you take your vehicle home. A larger down payment is typically better since it reduces the overall cost of the vehicle before interest begins to accrue, and that means you’ll be able to pay your vehicle off more quickly.
One simple and very effective way to increase the amount of money you put down on the day of is to trade in your current ride.
20/4/10 Rule
If you’re not sure how much money to put down on the day, you’ll want to consider the 20/4/10 rule, which can also be useful for setting a new vehicle budget. The 20/4/10 rule indicates that 20% of the total vehicle cost should be given as a down payment, which will help to reduce overall costs in the long term.
The "4" refers to the number of years it should take to pay off your vehicle, which is four. The 10 is about how much money you spend on your vehicle each month, including car payments, gas, upkeep, and insurance, which should not exceed 10% of your total monthly income.
It's important to consider your down payment when it comes to financing your next Toyota vehicle since a down payment affects your term length and overall costs. Visit Heritage Toyota Owings Mills to speak with our expert service team and to pick out the right vehicle at a price that fits your budget today.
