Buying a car is an exciting time! It’s a sense of freedom and a reflection of your personality. But finding the right car can be a tough task, especially if you have to search the phrase: how much car can I afford.
You might have a limited income or a small down payment. It may just be that you’ve never bought a car before and don’t know how the process works. Before trying to buy a used car and even before starting to shop for one, you’ll want to determine an appropriate budget for your purchase. Here are a few tips to get you started.
How Much Car Can I Afford?
How Much Down Payment Can You Put Down?
When you’re buying a car, the lender is assuming most of the risk. If it’s the first time you will be applying for a loan, you might need to take on a small portion of the risk yourself. That means applying a down payment to your car purchase.
Typically, the more money you can put towards a down payment, the better. You should have at least 10 percent available for your down payment. If you have $2,000 for a down payment, you’re likely able to buy a car for a $20,000 purchase price.
What Monthly Payment is Comfortable?
A rule of thumb for borrowing money is to expect payments to be around $20 per $1,000 you are borrowing. It can be higher or lower depending on the loan terms and the interest rate you qualify for.
That means that if you can afford $300 per month for a car payment, you can finance around $15,000 for the total price.
What Other Commitments Do You Have?
Buying a car isn’t the only financial obligation you have in life. You need to make sure you have enough money for other payments including car insurance, fuel, your rent or mortgage, and the little surprise bills you get from time to time. Make sure you leave yourself enough budget wiggle room to allow for other commitments.
If you’ve asked yourself or Google, how much car can I afford?, then let us help. At Jay Wolfe Auto Outlet, we specialize in helping you buy the used car that best fits your needs and your budget. We’ll walk you through the car-buying process so you’re confident and happy with the wheels you buy!