Find out how much you can pay for a car payment before you go car shopping. Check your budget, learn about car loans, and look into lenders. Once you know these things, you can choose a car that you will both like and be able to pay for.
Expense Of A Car
The FCIC says that your car payment shouldn't take up more than 20% of your budget after you pay for living costs. Even though this is a good starting point, you should look at your own budget numbers. Be sure to include other costs, like gas, insurance, and fees for getting a licence.
You will also need a down payment and enough cash for the licence, registration, and sales tax when you first get the car.
Details of car loans
Auto loans have different terms, not different ways to pay for them. You can expect to find reasonable rates if you put down at least 10%. There are auto loans with no down payment, but the rates will be much higher. In fact, you'll save more money on interest if you can put down more than 10% than if you get a lower rate.
You can also save money on your auto loan by choosing a shorter term. You can get a loan with payments spread out over seven years, but that will cost you hundreds of dollars extra. But make your choice based on what you can afford on your budget.
Auto Loan Lenders
There are more places than your dealership or local bank where you can get an auto loan. You can find a great deal from any of the hundreds of online loan companies. It will take a few hours to get quotes. Look at both the rates and the terms to find the best deal.
Check with traditional lenders even if you have bad credit. More and more people are giving out subprime loans. You might be surprised to see how low the rates are for people with bad credit.
You can also choose to get pre-approved for a loan, which will give you more power when negotiating the price of your car. The application process is done online, and you bring a blank check with you to the dealership. When you fill in the amount and sign the last paperwork, the loan is done.
