Pat Goss' Tips & Expert Advice
Determine A Budget For Your New Car
If you're like most new car buyers, you spend a lot of time imagining yourself behind the wheel of a particular new car that's caught your eye in an ad on TV or in a magazine. While it's fun to fantasize about your 'dream car,' some people get themselves into hot water by buying a new car they really can't afford. You want to be able to buy the nicest new car you can, but if you aren't careful, you could end up jeopardizing your monthly budget. You could even end up having a bank take back your new car because you failed to meet the payments. So, when you determine what you can truly afford for a new car, it's best to keep your emotions out of the calculation.
You'll likely be able to find a relatively low-cost loan for your new car but keep in mind that, the more you finance with a loan institution, the more that car is costing you in the long run in interest. Then, the great price you negotiated at the dealer is lost over time. Here are items you should consider when you purchase a new car:
- Wait until you can place a healthy down payment for the car. Some experts recommend about 20 percent of the total cost.
- Consumer Reports, a well respected advocacy group, recommends that your debt payments be no more than 36 percent of your gross monthly income. So, if you're gross income is $100,000 yearly, your debt, including your mortgage, credit card payments and other loans, should not be more than $36,000 annually.
- Some online sources offer calculation sheets and tips online. They are a great way to 'plug in' various debt scenarios and determine a realistic budget for a new car. You can find such sources by searching under: find new car, new car prices, new car search and other similar terms.
Keep in mind all these figures should be clear to you before you go out looking for a new car. Don't ever expect the sale person at a dealership to keep your best financial interests in mind. That is your responsibility.
