How Much Car Can I Afford?
Buying a car can be a big financial decision for you and it is important to know how much car you can really afford. The most important thing to do first is get your finances in order and make a budget. If you cannot afford a fancy car, do not buy a fancy car no matter how good the “deal” sounds when it is being pitched to you. The average American pays 11% of their gross monthly income on their car - which is a lot. You can get away with that but you don’t want to go over it and you probably want to drop it depending on how much you mortgage is, and if you have other loans and credit payments to make.
You can always take out a loan to buy your car but that will add to your monthly finances. Cars depreciate in value quick and more than likely you will end up paying a lot more than the total value of your car by the time the loan is up. That is especially true now days with people changing cars as often as three times a year. It might be a better option of save up and pay for your car in cash and taking the cash back incentive. This all is based on how much you have saved up and can afford. Paying up-front in cash is probably the best value you can get on you car but not many people have the money to be able to do this. Financing might be your best option, just make sure you do not buy a car that is more expensive than you can afford to make with monthly payments. As always, use your discretion… but don’t let your wants overtake your needs!
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