Having your own car is comfortable and convenient. When you buy a car, you are stuck with it for a long time. It is expected to satisfy your utility. In sparsely populated neighbourhoods and areas, dependency on cars in higher.
People invest their hard earned money into these cars. But not all of them are educated about the pricing and tend to be hoodwinked by dealers. To avoid this, you must know how much to invest in a car. Taking into consideration the following factors will help you know how much you must spend on a car.
Financial status
Everyone has a different financial stature. It depends upon factors like, income, expenses, lifestyle, family, etc. All the calculations done while buying a car must be done after taking these factors into consideration.
Down Payments
It is possible for very few people to pay the whole amount at once when buying a car. You can avail a car financer’s services. Preferably, down payments must not exceed 20% of the price of the car. This will help you reduce the loan amount. If you cannot tender an amount as big as 20% of the cost of car, it is a sign, the car is out of your budget.
Period of Payments
Ideally, a loan should not go on for more than 4 years. This is because a long drawn out loan can mess up your finances and credit rating. The period must depend upon monthly installments.
Monthly Payments
These payments must not be more than 36% of your gross monthly income. For example, if you earn around $20000 a year, you can afford to pay around $560 every month.
Maintenance and Hidden Costs
Buying a car will not put an end to cash outflow. Accessorizing, maintenance, insurance and repairs also must be considered. If buying a used car, there can be a higher chance of car repairs occurring.
Taxes
Buying a car has number of taxes associated with it. These taxes, if not factored in, can lead to an unwanted increase in buying costs.
Cost – Not Affordability
After considering all these factors, a buyer may find that he can easily afford the car. This is a good sign, but is the price of the car justified? If you are not sure about it you can get a professional opinion.
If you find that you can’t afford to buy the car you want, you can easily take a loan from Insta Auto Loan.
