How Much Car Can You Afford?
Knowing how much you can afford is crucial to know prior to applying for an auto loan. You’ll want to make sure you can afford any down payment, as well as the monthly payments, before purchasing a vehicle. Generally speaking, financial experts recommend you spend no more than 10% of your household’s net income on an auto loan.
After you’ve budgeted appropriately, you can start researching vehicles that meet your personal and financial needs. We recommend taking advantage of credible resources, like Kelley Blue Book or Edmunds, to find important vehicle information, such as safety features, reviews, comparison charts, and much more.
Also, keep in mind that when it comes to vehicle costs, you’ll also need to budget for expenses beyond the sticker price. These costs include sales tax, dealership fees, auto insurance, registration fees, as well as ongoing maintenance costs. Experts recommend spending no more than 20% of your household’s net income for total car costs.