How Much Car Can I Afford? The Question We Have All Asked.
If you’re looking for an auto loan in Melbourne, Florida, one of the top questions you may be asking yourself is ‘How much car can I afford?’ There is an abundance of car dealerships in Melbourne, Florida, but the first step should be determining how much you should spend on your new car. It’s easy to be blinded by that new car smell, the fresh paint, and that awesome new stereo system. Though these features are great selling points for the car dealerships, taking your personal finances into consideration is a must. After all, you want to be able to enjoy your new car without worrying about how you are going to make your monthly auto loan payment on top of your other financial obligations.
Two Vital Pieces Of Information
Consumer Reports advises that there are two major pieces of information you need to know to understand how much car you can afford.
- Down Payment: Take into consideration how much money you can put down in cash or with a trade-in, or both.
- Monthly payment: If you are like many people you will need to take out an auto loan to buy your new vehicle. Take a hard look at how much you think you can afford to pay every month. A great tool to help you with this is Launch CU’s Car Affordability Calculator.
Steps To Help You Answer, “How Much Car Can I Afford?”
BankRate advises that you should take these three steps to answer the important question, “How much car can I afford?”
- Calculate your monthly take-home pay.
Ronald Montoya, Consumer Advice Editor for Edmunds.com advises that your new car budget should not be more than 20 percent of your take-home pay. Keep in mind that your monthly car budget includes more than just your auto loan payment. It also includes additional expenses like gas, repairs, washes, oil changes, insurance, etc. It’s ok to be frugal when it comes to your new car. Think about if you need that top-of-the-line model, or if you could be just as happy with the base model. This is especially true if you have a lot of other monthly debt, or a high housing payment.
- Consider your credit.
Applying for an auto loan is a step that many people have to take in order to get a car. Your credit score is a major determinant on being approved for an auto loan, as well as the interest rate that you pay. Knowing what type of interest rate you could be looking at based upon your current credit score can provide you with some additional information on just how much new car you can afford. A good tool to use is Launch CU’s Auto Loan Payment Calculator. This car calculator can provide you with a ballpark estimate of just how much your auto loan payments will be
- Don’t disregard gas mileage.
When buying a new car, gas mileage is not something that should be forgotten. Make sure you understand the fuel economy of the car that you are interested in buying. Many consumers do not take gas costs into consideration when buying a new car. This results in additional, unplanned costs, which could place a strain on your monthly finances. A great tool to help you estimate fuel economy is the U.S. Department of Energy’s Car Comparison Calculator where you can compare up to four car models.
Additional Elements To Keep In Mind
- Auto insurance
- Car registration fees
- Sales tax
- Dealer fees
- State licensing fees
- Maintenance and repairs
- Vehicle depreciation
Final Thoughts: How Much Car Can I Afford?
So, are you now able to answer the question, “How much car can I afford?” The biggest thing to keep in mind when buying a new car is that you want to actually be able to enjoy that new car smell, rather than worry about the additional monthly costs associated with your latest purchase. Buying a car is a large investment, but tools such as Launch CU’s Auto Loan Payment Calculator and Car Affordability Calculator can assist you in purchasing a car that fits your current financial situation. Keep in mind, you don’t have to buy top-of-the-line. It’s always good to give yourself a little breathing room should an unexpected emergency pop up. If you’re ready to buy, consider Launch CU for your auto loan in Melbourne, Florida.