Cars

Youve been bitten by the new car bug Or perhaps youre just so tired of your current car you can hardly stand to drive it anymore

Youre about to embark on the research phase of the car buying experience which is the right course of action But before
Youve been bitten by the new car bug Or perhaps youre just so tired of your current car you can hardly stand to drive it anymore

Youre about to embark on the research phase of the car buying experience which is the right course of action But before you even begin pointing clicking and eyeballing these shiny new toys take a step back and determine just how much car you can afford to own and operate

The conventional wisdom is not more than 20 of your monthly income your net take home pay not your gross pay And by the way while youre doing your figuring on this 20 monthly cash outlay make sure you include all the cars you own

Regardless of whether you dont even pay rent or own your home outright stand firm on the 20 rule

On your way to calculating your 20 budget in addition to the purchase price be sure to factor in any down payment andor your tradein value The bottom line youll finance is the bottom line

Of course the more money you put down the more car you can buy and still be under the 20 rule Keep in mind the more money you put down doesnt affect how much you actually pay and cars are severely depreciating assets not investments

Once you get close to determining your 20 number youll need to know the going interest rates youll be paying on your borrowed money And since weve now broached borrowing money and interest rates you should also plan on getting a copy of your credit report while youre at it

Another important aspect to consider is the costs of ownership involved with the car Things such as fuel maintenance and insurance premiums can run up some hefty numbers on you in addition to your monthly payment

Maintenance and insurance costs are somewhat related because insurance companies take into account the cost to repair a vehicle as part of their premium calculation So if you are looking at a car that is expensive or difficult to repair youre probably also looking at higher insurance premiums as well

So even though you should keep the 20 rule firmly in mind as your are crunching your numbers dont overlook all the other monthly expenses associated with the car you are considering

Taking the time to get all of your financial and budget numbers in place before you seriously begin looking at your intended makes and models will serve as a good financial rudder for you during the car buying process and make for much wiser purchase