How Much Car Can You Afford?

Buying a car requires careful planning. Beyond deciding which make, model, and features are right for you, you’ll need to figure out what your budget will be. A financial expert at your bank can help you decide how much car you can afford. You can also use the quick tips below. How Much Car You Can Afford While everyone’s situation is a little different, financial experts generally agree that car buyers should spend no more than 10% of their net income on a new or used car. Your net income is your take-home pay, after taxes and other deductions are taken out of your paycheck. This means that if your net income is $3,000 per month, you can likely afford a car payment of $300 per month. Note that not everyone should necessarily buy as much car as they can afford. If you have a significant amount of debt already, you may be better off buying a less expensive car. In addition, consider your long-term plans. If you are saving up to buy a home or planning to add to your family, buying a less expensive car will offer more advantages in the long run, as you’ll have more wiggle room in your monthly budget. What Else to Consider The purchase price of the car isn’t the only factor to consider. Remember that you’ll also have to pay the sales tax and fees to get it on the road. Assuming that you’re purchasing a model year that is newer than your current car, you may also have higher insurance premiums. Plus, if you’re switching from a sedan to a larger vehicle like an SUV, you can expect to pay more for maintenance and repairs, as well as replacement components like new tires. You’ll also pay more for fuel each month. These are all factors to work into your budget when deciding how much car you can afford. When you’re ready to buy a new or used car, you can visit Mountain Valley Bank in Steamboat Springs, CO. They offer customized personal loans at competitive interest rates with flexible terms. To speak with a Consumer Lender, call (970) 870-6550.