Mercedes-Benz Financing Tips: How to Use the 20/4/10 Rule

The Mercedes-Benz financing process doesn’t have to be overwhelming. At Keyes European, we’ll match you with the right vehicle for your lifestyle and driving needs, and share all the financing tools and resources you need to take it home with confidence. Learn how you can use the 20/4/10 rule to pick out a car you love with help from our team.

20 Percent Down

The 20 in the 20/4/10 rule refers to your down payment. The more you are able to put down on the day of purchase, the more money you’ll save on accrued interest over time, and the more quickly you’ll be able to own your vehicle outright. This guideline recommends putting down 20 percent of the vehicle cost for your down payment.

4-Year Term

Next, you want to consider how quickly you can pay the vehicle off. Shorter terms tend to have lower interest rates, but the payments can be high, and if you aren’t able to make the payment regularly, there may be penalties. Longer terms allow you to pay less monthly, but have higher interest, and you’ll accrue more in interest costs over time. That’s why the 20/4/10 rule recommends paying off your loan within four years to strike a smart balance.

10 Percent on Transportation

You also want to account for the costs of your vehicle beyond the payment. The 10 in the 20/4/10 rule refers to the percentage of your monthly income you spend on vehicle costs, including insurance, fuel, and maintenance. The guideline recommends keeping the sum of these costs under 10 percent of your monthly income.

Start the Mercedes-Benz Financing Process in Van Nuys, CA

No matter what your vehicle financing needs might be, you’ll find the support you deserve at Keyes European. We carry a wide inventory of vehicles you’re sure to love, and offer expert budgeting information to help you along the way. Visit our dealership to explore your new luxury performance vehicle options today.