How To Calculate The Right Budget For A New Car
Going for a new car is possible obviously when you have the money to pay for it. The overall cost would not only consist of the basic price of the car sold at, but the taxes, the interest paid on loan, the running and maintenance cost after the warranty period is over, and all this would come in a queue after the amount is fixed for the down payment. To help you with calculating and estimating the budget you should keep for your dream car here is a set of suggestions that won’t make you reel under a financial pressure round the year.
How Much Is Okay for the Down Payment
According to the Lemon Grove Mazda dealer, the first and foremost step to start the procedure for budgeting for your car purchase, is taking an account of the lumpsum amount you can afford to spend for the down payment.
- A careful account for the available cash you can spend, leaving sufficient amount for emergencies and other priorities would get you started.
- If you have already saved a good amount to pay the entire amount in cash for your car, it is advisable to keep the major share for installments, as that way, you won’t have to feel the pressure for the interest as you can earn the same amount from the bank, while your money is with you along with the car.
- A thumb rule in car purchase is to make a down payment that is 20% of the of the purchase price.
Finding Out Your Trade-In Equity, If Any
If you have an existing car that you want to upgrade, consider knowing its real worth for selling or as a trade-in, as that would save a good amount of money in terms of trade-in equity. Today there are many online sites that have tools to roughly estimate how much money your existing car is worth of.
Monthly Payment You Can Afford
Mostly car buyers don’t prefer to pay the entire amount of the car price in cash. Going for a financing option has almost become a norm. Then comes the part of insurance, which comes under compulsory expenditure continuing for a lifetime. A car needs an extra cost for running. Be it the fuel, purchase of car fluids and round the year maintenance, the amount would always climb up. Assimilating all this as a monthly expenditure, you need to deduce a ratio of your income vs expenditure, in addition to the existing ones you pay for running a household.
Calculating the Time Span for Repaying the Loan
The last and final step is to think, for how long you can continue to repay the loan amount. The experts from the best dealers recommend car loans that are of 48 months or even less. The maximum tenure you can drag should be not more than 60 months under any circumstances, or else you are unnecessarily paying a huge amount more than the actual price of the car. As explained by the Mazda dealer Lemon Grove, this is so because the longer is the loan term for your car, the more you are going to pay as interest.
Rounding it Up
After placing all these expenses against your existing cash saved for a car purchase, you can now find the latest trim models that fall under your budget and drive it home.