Question

Using the 20-4-10 rule your monthly gross is $8950 the car costs $22500 how much will be your monthly payment how much will your down payment be

Answer 1

Under the 20-4-10 rule, you should make a down payment of $4,500 (which is 20% of the car price) and ensure that your monthly payment does not exceed $895 (which is 10% of your monthly income).

Step-by-step explanation:

Based on the information provided, under the 20-4-10 rule, when buying a car you should aim to:

Make a down payment of at least 20% of the purchase price.

Finance the car for no more than 4 years (48 months).

Have a monthly car payment (including principal, interest, and insurance) that does not exceed 10% of your gross monthly income.

Given a monthly gross income of $8,950 and a car cost of $22,500, let's calculate:

Down Payment: 20% of $22,500 is $4,500.

Monthly Payment: 10% of your monthly gross income is $895.

Note that the monthly payment should cover not only the loan payment but also insurance costs, so the actual amount going towards the loan will be less than $895.