How Much Car Can You REALLY Afford?

When purchasing a vehicle, it’s important to know what you can afford. You may find out that how much of a car you can really afford is much different than what the car dealer led you to believe. After all, they’re out to make sales. Here are some tips to remember when car shopping.

Know What You Need

Before you visit a car dealer, know the type of vehicle you want and what you need. Car dealers will often try to sell you more than you want or need. Unfortunately, what they try to sell you may be more than you care to spend, more than you need or more than you can afford to pay. Take note of the following factors prior to visiting a car dealership:

  • Insurance costs
  • Gas mileage
  • Family size

Calculate Your Payment

Few things are as disappointing as thinking you’ve found the car of your dreams only to discover you just can’t afford the payments. The disappointment can be compounded when you discover this AFTER you’ve purchased the car. This can usually be avoided by using a vehicle loan calculator. Once you have some interest rates and car prices, you have all the info you need to get some fairly accurate numbers regarding what your monthly payment will be based on different loan terms.

Compare Rates

Few things can take the fun out of owning a new car than finding out it’s more than you can afford. By comparison shopping, utilizing auto loan calculators, and buying what you need, you’ll have a vehicle that is not only a good buy but one that meets your wants and needs. Shop at different auto dealers to see what each one has to offer. Consider different financing options as well to learn which lender is willing to offer the best interest rates and loan terms. Some auto dealers offer financing as well.

New or Used?

Although you probably love the idea of driving around a new car, truck, or RV, it’s not always an option. Obviously, new vehicles are going to cost more than used vehicles. However, one thing considering is that interest rates are often lower on new vehicles than used. By carefully tracking associated costs, you’ll have a good idea of which one you can afford and which one is the better bang for your buck.