New Car Buying Guide | Selecting a New Car

How much can you Afford

You may already be dreaming of a model that has caught your eye. Or of features that will make your driving more pleasurable. But first you must face reality. The first step in buying a car should be to estimate what price range you can afford.

To do this, you need two pieces of information:
Down payment: How much money can you pay up front in cash?
Monthly payment: If you plan to borrow money, what is the maximum payment you can afford every month?

While it may be possible to find an auto loan that requires a low down payment, such as 5 percent, it's best to, put down as much as you can afford—preferably at least 20 percent. A higher down payment reduces the amount of money you need to borrow, which lowers your monthly payments and reduces the amount of interest you’ll pay overall.

A down payment doesn’t have to be all cash. If you already have a car, any trade-in allowance the dealer gives you for it can be credited toward your down payment. Or you can sell it yourself, which will usually get you more money than trading it in. But you may need to do it before you buy your car.

By knowing your down payment and monthly payment, along with a typical interest rate and the number of years you’re willing to make car payments (the term of the loan), you can calculate the price of the vehicle that you can afford and the loan amount for which you’ll need to qualify.

In addition to the vehicle price, you need to consider other costs, including: Sales Tax, Road Tax & Registration fees!



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