When planning to finance a vehicle, you have to devise a payment plan that fits your budget. There’s a good rule of thumb to follow that can help you get a good grasp on Volvo financing.
Down Payment – 20 Percent
You should aim for a 20 percent down payment on your car. That may be a significant number now, but it will be worthwhile longer-term. The higher the percentage you take off your loan principle now means a smaller loan and lower monthly payments. A sizable down payment may also get you a lower interest rate, and if you don’t have all of that 20 percent on hand, a vehicle trade-in may be able to cover the difference.
Loan Term – 4 Years
The next concern is how long you want your loan to be. The number of years can vary widely, but four years is ideal. This enables you to have reasonable monthly payments without accruing too much interest.
Monthly Payment – 10 Percent of Your Income
The last thing to think about is the payment you will pay each month. You don’t want to overextend yourself, so you shouldn’t exceed 10 percent of your monthly income. It is best to think beyond the car payment, factoring in vehicle expenses like gas, insurance, and maintenance.
You can contact Volvo Cars of Worcester if you need more guidance about financing a new Volvo vehicle. And if you are ready to start the process, you can fill out our online application to get pre-approved for a loan.
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Finance