The 24/10 Rule: Can You Afford a CR-V?
45sThe classic 24/10 rule is a relatable financial benchmark that viewers will want to test against their own income.
▶ Play ClipAI Summary
This video analyzes the affordability of a Honda CR-V using the 25/10 rule, a guideline for car purchasing. It calculates the required monthly income and annual salary needed to comfortably own the vehicle, considering down payment, loan term, and total car expenses.
Chapters
[00:01]
Honda CR-V Starting Price
The Honda CR-V, one of the best-selling SUVs in America, starts at $30,920.
[00:01]
The 24/10 Rule
The traditional rule suggests a 20% down payment, financing for no more than 4 years, and total car expenses not exceeding 10% of gross monthly income.
[00:16]
Financing Options
Financing over 4 years results in a $575 monthly payment, while a 5-year (60-month) loan reduces it to $472 per month.
[00:31]
True Cost to Own
Using Edmunds.com's True Cost to Own calculator, insurance and maintenance for the CR-V average $205 per month.
[00:43]
Income Calculation
Multiply monthly car expenses by 10 to get required monthly income, then by 12 for annual salary. For the CR-V, this yields an annual salary of $81,240.
[00:59]
Final Salary Requirement
The video concludes that a salary of $93,600 is needed to comfortably afford the Honda CR-V.
The video demonstrates that using the 25/10 rule, a comfortable income for a Honda CR-V is around $93,600 annually, which may be higher than many expect.
Mentioned in this Video
Study Flashcards (5)
What is the starting price of a Honda CR-V?
easy
Click to reveal answer
What is the starting price of a Honda CR-V?
easy
Click to reveal answer
$30,920
00:01
What is the 25/10 rule?
medium
Click to reveal answer
What is the 25/10 rule?
medium
Click to reveal answer
Put 20% down, finance for no more than 4 years, and spend no more than 10% of gross monthly income on total car expenses.
00:01
What is the monthly payment for a 5-year loan on a CR-V?
easy
Click to reveal answer
What is the monthly payment for a 5-year loan on a CR-V?
easy
Click to reveal answer
$472
00:16
What are the average monthly insurance and maintenance costs for a CR-V?
medium
Click to reveal answer
What are the average monthly insurance and maintenance costs for a CR-V?
medium
Click to reveal answer
$205
00:31
What annual salary is needed to comfortably afford a Honda CR-V?
medium
Click to reveal answer
What annual salary is needed to comfortably afford a Honda CR-V?
medium
Click to reveal answer
$93,600
00:59
💡 Key Takeaways
⚖️
The 25/10 Rule
Provides a clear, actionable guideline for car affordability.
00:01
💡
True Cost to Own
Highlights the importance of considering insurance and maintenance, not just the loan payment.
00:31
📊
Salary Requirement
Gives a concrete number that viewers can compare to their own income.
00:59Full Transcript
[00:01] Honda CRV, one of the best-selling SUVs in America? This one starts at $30,920. In the past, we would use the 24/10 rule to figure that out. That's where you put a 20% down payment on a car, finance the car for no more than 4 years, and you
[00:16] can't spend more than 10% of your gross monthly income on total car expenses. these days because if you finance that amount over 4 years, your total payment is 575 a month, but if we finance it over 5 years or 60 months, then our
[00:31] estimated total monthly payment is 472, and that's more reasonable. Using the edmunds.com true cost to own calculator, we actually find out that the Honda CRV insurance and maintenance cost per month are roughly $205 per month. This is our
[00:43] multiply this by 10 to get our monthly income needed, then multiply this by 12 to get our annual salary needed. So, to comfortably afford a Honda CRV using the 25/10 rule, we need to make an annual salary of around $81,240.
[00:59] $93,600 to comfortably afford this car. So, what are your thoughts? Was this more or less than you expected?
