Buying a car can be quite a process. Not only do you have to find a car you like and haggle for the best price, you have to worry about how you will pay for it. So many people have such high car payments that they struggle to pay their bills. They fall back on credit cards. They think that the cards are the problem, when in fact the car payment is at the foundation of their troubles.
When you are looking to buy a car, you need to know how much you can really afford to spend. You should spend no more than 15% of your after-tax monthly income on your car payments. Your car payments shouldn't exceed this amount.
If your family must have more than one vehicle, focus on having one good family vehicle that has a loan on it and one that is paid off. Two car payments at once are really pushing it for most people. For example, if you make around $40,000 before-taxes each year, you shouldn't be spending any more than $400 a month on your car payments. That doesn't get you to far.
Keep in mind that there is more to a car than the monthly payment for the loan. You will also have insurance to pay for. This can vary depending on the make, model and your area. Some vehicles also have higher repair and maintenance costs. Consider these costs when choosing the type of vehicle you are looking to purchase. And don't forget gasoline expenses!
If money is an issue for your family, a used car is really the best deal out there. New cars depreciate so quickly within the first two years. A used car really is a better deal. If you really want a new vehicle or are concerned about warranties, look for a vehicle that really holds its value well.
You need to know how to handle yourself when it comes to financing. You should always be prepared. Go home and work out the figures before you sit down with the finance manager. Know if the rebate or low interest rate is a better deal. Look closely at choosing the shortest loan as possible. If you can pay off the loan in 36 months, you are choosing the best financial option.
Be careful when buying a car. If a manager pushes you to move too fast, walk away for a while. Slow things down and really let the numbers add up. Don't let them change the numbers around for tax purposes (to save you money). Take your time and make sure that you are getting what you want.
Martin Lukac represents http://www.RateEmpire.com, an Internet consumer banking marketplace. RateEmpire.com is a destination site of personal finance, investing, taxes and mortgage rates. RateEmpire.com provides mortgage guides and financial rates and information. RateEmpire.com also operates a financial portal #1 American Financial, found at http://www.1AmericanFinancial.com and San Diego loan portal http://www.LendingSanDiego.com
