September 6th, 2010 • 14:09
How Do I Calculate How Expensive Of A Car I Can Afford?
There are plenty of housing calculators saying how much you should spend, but I’ve never seen anything on what kind of car you can afford.
to solutions…
There are plenty of housing calculators saying how much you should spend, but I’ve never seen anything on what kind of car you can afford.
Sep 6th 2010 • 14:09
by Out of Focus
The first thing I would do in your situation is calculate your disposable income by doing the following
Calculate your monthly income (salary/12)
Then add up all your monthly bills e.g. rent, utilities(estimate monthly utilities), credit card or other loans, phone, cable and whatever else
The add up your monthly incidental expenses (groceries, dining out, clothing, laundry). Estimate these expenses and be realistic. Check your bank statements for the past couple months to see how much you’ve spent
Then use the following formula:
Monthly income
-monthly bills
-monthly incidentals
=disposable income
Your next step should be the research what car you want. I suggest going to http://www.edmunds.com.
On that website you can research compare different makes and models. You can also recieve price quotes and theres a loan calculator.
Use that calculator to estimate your monthly payment. I would suggest that your payment be no more than half your disposable income. You’ll need a cushion for rainy day purposes.
Hopes this helps.
Sep 6th 2010 • 14:09
by ALEGNA
Determine a monthly payment that you can afford first, then figure out what loan amount that’s going to give you that payment.
You can use housing calculator just the same! What you will change is the amount of loan, terms-60 months (5yrs), 48 mo, 24, 12mos, etc… then the interest rate! Just keep changing your loan amount until you get the payment you want!
You’ll be inputting the same in regards to the payment, just much shorter term and much smaller loan, and rate!!
Sep 6th 2010 • 15:09
by Recruite
Ok. First of all, do you keep a budget for your finances? If you lay out all your expenses monthly compared to your income, you will be able to see what’s left. Remember to factor in insurance costs, you can get online quotes from geico or esurance.com. Remember to take into consideration any future expenses you might have coming up, as well as the little things like meals out or entertainment. If you need a budget format, you can IM or email me. I was able to pull myself out of serious debt and buy a house using it (and sticking to it!)
Sep 6th 2010 • 16:09
by kramerdn
Pretend like your car is a pure expense just like food or utilities. Figure out how much you want to pay.
Good financial advisors will tell you to purchase the cheapest car you can stand. Don’t throw away money on bells and whistles and fancy names. Remember that expensive cars also cost more in insurance expense and repair expense. If you want to impress people, find another way to do it. Or better yet, take the difference in payment in the car that tempts you vs. the basic car and invest it.
Sep 6th 2010 • 17:09
by Mark D
There are plenty of housing calculators saying how much you should spend, but I’ve never seen anything on what kind of car you can afford.
Sep 6th 2010 • 18:09
by paige p
what i do, the hard way…is calculate ALL of my bills….from rent to my internet bill….what you need to live on….your savings…and whatever u have left….u can spend on your new car. thats how i figure out everything…what i can and can’t afford. we just bought a new motorcycle, thats how i did my figures…and we’re doing just fine. lol, i’m sure theres an easier way….but i dont know it….
Sep 6th 2010 • 20:09
by xtral8
You create a budget, and then factor in gas, insurance, upkeep, etc. Remember when looking at cars that they are a depreciating asset…by that I mean they are things that lose value…and fast.
If you are going to finance a vehicle, you need to be sure that you look at how well they hold value, or you could end up in a situation where you owe more than the vehicle is worth.
I agree with the answer given earlier that buying the least expensive car you can stand is the best policy.