How to Know How Much Car Payment I Can Afford

1.

Research auto loan rates. You can search online for the rates and terms that are being offered by the major banks for new or used cars. You can also look to see what your bank or credit union are offering.

2.

Go to an online auto loan calculator and enter the term and interest rates that you have found. Your variable is going to be the total loan amount. Based on the monthly payment, you can make the loan amount higher or lower to fit your needs.

3.

As a general rule of thumb, your target should be no more than 10\% of your gross income (what your income is before taxes and other deductions are taken out). Keep in mind that if you have a lot of other montly revolving debt, you may want to reduce that factor.

4.

Research cars online and find out what year, make and model of car that are possibilities for you based on that number. You will also want to call your car insurance company and ask for a quote on that car to see how your auto insurance rates will change with the new car. This number should be a factor in determining which cars are a good choice for you.

Everyone loves a shiny new car but exactly what can you afford?