What car can I afford?

Before you head out the door to buy that car you’ve had your eye on, take a few steps back and ask yourself a few questions:

o How are you going to pay for that new car?

o Will you be approved for your loan?

o Can you afford the monthly payments?

o Do you have a down payment or a trade in?  Do you know what your trade in is worth? 

Chances are, you will need to negotiate the price you get for your trade in and having that information ahead of time will give you an advantage.

o Do you know your credit score?  A good credit score will give you leverage negotiating a better rate however, a bad credit score will mean higher interest rates.

o Do you know you can save hundreds or thousands of dollars by shopping around for a new car loan?

o Do you know what tax, title, and destination will cost?  Those pesky fees have a way of sneaking up on us and putting us over what we want our monthly payment to be.

Lots of questions to think about, right?  A quick trip online will give you much of the information you need to know.  The most important information is to determine what you can afford on a monthly basis.  There are a few factors that go into that calculation:

o How much will the car cost? 

o How much will you put down?

o What are the interest rates available to you?

o How long will your loan be for?  Standard loan terms are 36 months, 48 months, and 60 months.

A basic online loan calculator tool will give you the information you need.  Many good online loan calculators will also give you the interest rates for your location. Simply input your zip code in and they’ll give you the going interest rate for local lenders. Once you have a likely interest rate, or at least an accurate range, you can determine what your monthly bill will be.  Then and only then, can you head out with confidence.

This confidence will not only make your car buying experience more enjoyable, it can also give you the confidence to negotiate like a pro.  Imagine knowing the maximum you can afford is a $30,000 car, and negotiating a $6,000 car down to your price.  You can walk away from the dealership feeling like a pro, and with the confidence you can make each payment without stressing your bank account.

 



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