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How Much Car Can I Afford (20/4/10 Rule)





If you’re in the market to buy a car, you might be asking yourself “how much car can I afford?”. In this video I teach you the 20/4/10 Rule which is a great rule of thumb to understand how much car you can actually afford.

Cars are a big financial decision that most of us have to make, and it’s smart to go into a car buying situation knowing exactly how much you can truly afford. This video will help you do that.

Although I still prefer to buy cars cash, I think that the 20/4/10 Rule is a good starting point for someone to decide if a car is affordable or not related to their income and budget.

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22 comments

  1. Real men wear pink.

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  2. Wish I would’ve seen this video before getting my new car

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  3. Cash out values everything. Never fool with a credit card

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  4. Solid advice. I bought all my vehicles with cash until my most recent purchase. I’m not great with finance but I hate debt. I would buy a vehicle drive it for several years give it away (literally for free) when I was tired of it or started costing me more than car was worth. My most recent however I couldn’t resist. Tired of dreaming of a muscle car I may one day have enough cash to buy, I went out purchased a loaded scat pack charger. So far nothing but smiles and I’ve managed to pay more than my monthly payments. Hope to payoff in 3 years and buy another muscle car. Worth every penny!

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  5. My country went on lockdown the day before I was gonna get a car. I have mixed feelings about this one side of my brain is saying I could die any moment just buy it the other side is seeing recent events as a sign to just fix my current issues on my current car. But I want an upgrade so bad.

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  6. With 0% interest options today, does this change the 48 month rule? Might as well do 72 months because you won’t pay any additional interest.

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  7. By "an investment vehicle" he doesnt mean a car!!

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  8. Love the idea of paying with for a car with cash. We recommend that as well. Thanks Marko!

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  9. while saving for a car, can i invest that money for the mean time while saving? instead of just leaving the money in the bank?

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  10. Don't forget the $5000.00 transmission at year 2 .
    After the smog repair 1000.00 year 1
    And then 6 months after the transmission, car is deemed totaled , in the fender bender cause the airbags deployed. And value is 500.00

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  11. I would only go off 10% of after tax income. Where I live as a w2 employee I only keep 70% of my paycheck

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  12. Are we talking about income before taxes or after? 😐

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  13. You’re definately Slavic. Brate .

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  14. You save $5,406 by saving a year but you put down $5,000 so in hindsight you saved only $406 about $1,000 in interested. Is 1,400 really a big difference ? If budget is $500 a month and payment is $460 saving those $40 for the life of 60 months is $2,400 he would save and put it towards the payment of the car.

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  15. I love your Videos 🙂

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  16. Lmao. Buy a beater for $5000 then save for 4 years what you would have spent. No one just puts that money aside, they spend it on other stuff

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  17. Guys, I can’t afford a car. I can’t afford to save, and invest, I can’t afford to move out. I’m gunna get my associates in science this may. It’s not a bachelor, but it’s what I was able to afford and make happen. Anyone have any good ideas on what’s a good paying job that I could get with my credentials?

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  18. Your narrative doesn't match your numbers – you were discussing saving $ per month in order to save and own your next vehicle outright but In your own example from 4:38 onward, he puts $5000 down, he financed $20,000 – his payment to the BANK was $458 a month for 48 months, NOT to his savings for 48 months – ???

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  19. My rules: a Chrysler dealership has a 12 year old Mercedes for sale for 5000$. You know it was a trade and the dealership just wants to get rid of it. I offer 2500$. Cash. Fix it a bit drive it a year sell it 5000 in private. On average it costs me 100$ a month to own a car (paid price + all repairs – price sold). I used to only have brand new luxury cars until I realized how much money I was wasting.

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  20. Wow thanks for sharing this! I really am enjoying your videos.

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  21. You're only saving $1100 on the 60mth no money down versus the 48mth $5k down. That's only like $18 a mth for the 60mth loan.

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  22. You should never put money down on a car – if you can't afford the payment you can't afford the car. Not to mention that with GAP insurance (which is cheap) you transfer the liability to them if the car gets totaled.

    The other thing he doesn't take into account in all these car buying scenarios is the non-financial part. Do you get gratification from driving a nice car, or having the newest car, etc… I'd rather give up one vacation a year to drive a nicer car because I get to enjoy that a couple hours a day every day.

    Reply

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