Can You Afford a New Car

  by Jamie Franklin

How Much Car Can You Afford?

Choosing a new car can be a thrilling experience for many. Some are looking for a cheap car just to get by, but many are also looking for that dream car. The car that they can really jump into and feel good about. However, the tendency to go overboard, wanting to buy more than you can easily afford, can kick in.

What is Your Dream Car?

Everyone has a different definition of their dream car. For a mother of four, a dream car may mean a luxury SUV which is equipped with the latest safety innovations. On the other hand, for a 25 year old man, a dream car may mean the newest, fastest sports car out there. Whatever your definition of a "dream car" is, you most likely have a budget to work with. Very few of us can purchase any car we desire and even those who can afford a hot sports car may have to settle for an $80,000 one, as opposed to a $200,000 dollar one. Knowing your budget, and making a commitment to stay with it, before you begin your search will make the car buying process an enjoyable experience.

Knowing What You Can Afford

The first step is determining your car budget. A good range is to keep your car payments at no more than 15% of your total monthly income, 10% is even better. This is based on your net income (your income after taxes and other deductions or your "bring home" pay), not your gross income (your income before taxes and other deductions).

Once you have discovered what you can afford each month that is the time to find a car within this budget that will also fit your needs. You can utilize a website such as www.vehiclesonline.com to find out what vehicles are in your area and which one of these cars will fit into your projected budget. A comprehensive car search option, along with financial tools, will help you easily and quickly find what you are looking for.

Ways to Afford More

There are two main ways to get more car out of your current budget.

1. Buying a new used car instead of a "new" new car.

By buying a "used" car that is only 1-3 years old, you can still get an outstanding vehicle while paying thousands less than you would if the car were brand new. For example, a car that costs $15,000-$20,000 brand new, may only cost $8,000-$10,000 two years later. Many of these vehicles have been leased by the dealership and then put in the used car section to be sold, so the dealer knows exactly how many people have "owned" the car and has probably checked the car between each "owner".

2. Buy a car when interest rates are at their lowest.

Buying a car when interest rates are low, can also help you afford a larger monthly payment. For example, a $10,000 five year loan can save you $300 overall at a 6% interest rate, as opposed to a 7% interest rate. Although that may not seem like a lot, it is also based on a small car loan. If you have a larger loan, you will save more money. For example, the same loan at $30,000 will save you almost $850 at a 6% interest rate, as opposed to a 7% interest rate. That is a nice savings and will help to keep your debt-to-income ratio lower, which will help determine whether you can qualify for other things, such as a mortgage.

3. Buy On-Line

Yes, that's right; buy your new or used car or truck on-line. Most new car dealers have Internet sales departments. These low-key sales people don't deal with walk-in traffic, they service the customer who comes in through cyberspace. The dealership looks at this type of sale as one they would not have gotten locally. For this reason, they are willing to offer deep discounts to Internet buyers. Does this mean that you have to buy it, sight unseen? Absolutely not. You work out the details on line and go to arrange the final details and pick up the vehicle at the dealership.

It also makes sense to go through an auto portal like Vehicles OnLine. These automotive portals have many participating dealers and thousands of used cars on display for you to choose from. You can find this automotive at www.VehiclesOnLine.com.

Changing simple things so that you are able to afford a better car on a smaller budget, will help you enjoy your car buying search. You may still not be able to buy your dream car, but you will be able to find a reliable car at a reasonable price that you are satisfied with.

About the Author

Jamie Franklin is a freelance writer living in Dallas, Texas. Jamie writes about Internet shopping and services. She is a graduate of the University of Arkansas. You can email Jamie at Jamie_Franklin_1980@hotmail.com.