This post is part of a sponsored series of auto posts.
After months of me complaining about my car to my husband, he finally caved and said we could start looking at new vehicles. That was all well and fine, but then it brought up a question that we had to debate; what exactly could we afford to spend on a new car?
It seems like it’d be easy to figure out but there’s a little math involved if you really want to find something that works with your lifestyle and your budget. That being said, I did some research and found some methods to figuring out how much you can afford to spend on a new vehicle. Here’s the jist.
- The Car Affordability Calculator – If you’re a calculator kind of person (like myself) then you might appreciate this handy little tool that lets you put in your monthly income, monthly insurance costs, interest rate, down payment, trade-in value, length of loan, etc. Then it helps you determine how much you can afford to spend on a new car. Sounds easy enough, right?
- Apply the 20-4-10 Rule. It sounds more complicated than it is, kind of. Basically it means you should put 20% down on the vehicle, and finance for no more than four years. The last 10 is that your monthly payment should not exceed 10% of your gross income.
- Think it through. Don’t forget that there are added expenses when purchasing a vehicle. This includes taxes, registration fees, insurance costs, and more. This can add up to 10% more to your total cost, so it’s important to consider!
Once you know what you can afford to spend each month, then you can start looking at vehicles. I hate to do it the other way around because that’s how you get your hopes up. This way, you’re going in with a level head and a certain price range in mind and that’s a smart way to go about it if you ask me 🙂
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