Pat Goss' Tips & Expert Advice

A Reasonable Expense

Before you set out to get a car loan you should examine your personal finances and figure out what the maximum amount of money is that you can afford to pay each month in a car payment. If you do not take the time to figure this out beforehand then you may wind up with a car payment that is more than you can handle each month. This could result in an eventual repossession when you can no longer meet the payments. How do you decide how much money you can afford each month for a car payment?

Calculate the amount of money you bring in each month from your various income sources and then subtract the amount of money you spend in your monthly obligations such as credit accounts, housing payments, utilities, insurance, groceries, and other expenses. The money left over is the amount of money you can afford, although you should think about leaving a good amount of extra money each month for emergency expenses. Don't trust what the lender says you can afford; only you know for sure how much money you can comfortably afford each month for your car payment.