Let’s Be Real: What Kind of Car Can You Actually Afford?

Let’s Be Real: What Kind of Car Can You Actually Afford?

Every person on the planet probably wishes that he or she could walk into a dealership and leave with a Lamborghini or a new Corvette at the very least. However, those folks have to face the reality that they may never be able to obtain such vehicles.

That doesn’t mean a person should settle for a cheap car, however. A person can create a plan that maximizes his or her chances of obtaining a competitive new car or used car. The following is breakdown of the car buying process:

 

Saving Money

Before a person can attempt to buy even a cheap car, he or she must save money. Only people who have impeccable credit scores can walk out with a new car and no down payment at all. The down payment will be crucial to certain elements of the car loan. Therefore, the consumer will want to save as much money as possible. A good rule of thumb amount for a down payment is between $2,000 and $5,000. The person can save money once per week until he or she accumulates the desired amount. Everyone has the potential to save money. All it takes is motivation and persistence.

Calculating a budget is nothing more than subtracting one’s bills from one’s income and looking at the resulting figure. The resulting figure represents the amount of money the person has left (disposable income). That person can create a savings and purchase plan based on that number.

 

What Kind of Car Can You Afford?

The disposable income figure will let a consumer know what kind of car he or she can afford. The “car loan range” figure can be calculated by subtracting recreational and fuel expenses from the disposable income. If the resulting figure is $250 a month, then the person can pay that amount every month on a car loan. A wide range of new and used vehicles can fall into the $250 a month range.

 

Choosing a New or Used Vehicle

After calculating the budget, a person will want to decide whether to purchase a new or used car. Both types of vehicles have benefits to them. A new car is less likely to have mechanical problems during the course of the loan, while the used car will be much less expensive than the new one will be. Once a person chooses a car that fits his or her style and monthly budget, the rest of the process only involves paperwork.