Before going out to buy a car, one should do a complete analysis of his/her financial status. Review your income and expenses and the debts you already have. Knowing your financial position will help you to be in a better position when it comes to budgeting on the kind of car you want to buy.
Decide how much you can spare for the car payment on a monthly basis. It is recommended that your car payment should not be more than 15 percent of your monthly income. This percentage caters for other expenses and savings since it is important not to exhaust all your income.
This implies that a high down payment will mean that the balance that you will need to borrow is small and thus, small monthly payments. In an ideal world, a buyer should make a down payment of at least 20 percent of the price of the car in a bid to keep interest costs low and boost affordability.
Insurance is one of the compulsory expenses which depend on the make and model of the car and your record as a driver. It is advisable to get insurance quotes after you have decided on the car to buy so that over-utilize all of your income.
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