10 Steps to Finding the Right New Car
Step 2: How Much Can You Spend on a New Car?
The most important part of buying a new car for most buyers is the price. How much can you afford to spend on a new car? This question will narrow down the selection of available cars. The rule of thumb about car payments is not to allow payments to exceed 20 percent of your monthly take-home pay. Another rule of thumb is that rules of thumb are almost never applicable to your specific situation. Only you can decide how much you are comfortable paying for your new car. If you see a car as an appliance that gets you from point-A to point-B, then you may want to spend significantly less than you can afford. If you are really in to your cars, you may be willing to spend more than somebody else with similar income.
Methods to Determine Your New Car Budget
One method is to compare the monthly payment of a new car to the monthly payment you paid for your last car. This will give you an idea if you are comfortable spending more or less each month. To estimate your monthly payment, you can use our auto finance calculators listed below. These calculators will take into account the purchase price, down payment, interest rate, length of the loan, the value of your trade-in, any applicable incentives, taxes, and fees. You can also calculate rebates vs. low-interest financing, lease costs, different loan types, and more.
Two other factors to consider when thinking about the price of your new car are insurance costs and the cost of maintaining the vehicle. Do a little legwork and find out how much new tires cost for the car you want to buy. Also, call your insurance company and get an estimate. It is important to do the items in this step before visiting dealerships. Nothing is worse than falling in love with a car that you cannot afford to buy, insure, or own.
Your Credit Score– You will also want to know your credit score. Your credit rating will directly influence the interest rate you pay to borrow money toward your new car. For more information, Autotropolis has assembled a comprehensive auto financing category that will guide you through pre-approval, low-interest savings, home equity loans, and more.
Auto Finance Calculators
You can use our Auto Finance Calculators to find out what the payment will be on any range of prices.
- Auto Loans - Find out how much automobile you can buy based on your monthly payment, or find out your loan payment based on your purchase price!
- Auto Rebate vs. Low Interest Financing - This calculator helps you decide whether you should take advantage of low interest financing or a manufacturer rebate.
- Home Equity vs. Auto Loan - This calculator helps you determine if a home equity loan makes sense for your next automobile purchase.
- Lease vs. Buy - One of our most popular calculators that tells you in black and white whether you should lease of buy.
- Low Interest Financing Savings - This calculator to help find the best monthly payment and how much interest you could save with low interest incentives
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