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      January 16, 2019

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How Much Car Can You Afford?

It finally happened. Your old car – the one you had decided you would keep until it literally fell apart – has finally bit the dust. Or maybe you’ve decided the time is right to upgrade to an SUV to help get you through those rough winters.

No matter what your reasons, if you’ve found yourself in the market for a new or used vehicle, then one of the first steps in the process is to decide how much vehicle you can afford.

There are financial rules about how to know if you can afford many things. Rent on a place to live should be no more than one week’s paycheck. A monthly mortgage payment should be no more than 20 percent of your salary after taxes.

A similar rule applies to knowing just how much you can afford when it comes to purchasing a new or used vehicle. Financial experts have suggested that no more than 20 percent of your monthly income after taxes be spent on an auto payment. That includes factoring in the purchase price, any down payment you are able to make, and the interest rate and term of the loan.

Estimating your monthly payments, based on the purchase price, down payment and financing options, also is important. If interest rates are low, it allows for buyers to get more for their money. However, if you have less than stellar credit, it will affect the kind of interest rate you receive on any loan. If you are subject to a higher interest rate, it would be wise to seek out a less-expensive vehicle to offset the larger interest amount you’ll be paying.

One of the best ways to lower your monthly payment and get a lower interest rate is to put a significant chunk of money down on the vehicle you wish to purchase. If it is in your budget, try to put down at least 10 percent of the vehicle’s purchase price in the form of a down payment. The higher the down payment is, the lower the monthly payment will be, which can increase your ability to pay off the loan sooner.

Another very important factor to consider is the maintenance costs for the vehicle you will be purchasing. Most brand new vehicles come equipped with three year or 36,000 mile warranties at a minimum. A few car dealers will offer warranties on the power train that can extend to 60,000 miles or more. These warranties only cover the cost of repair work, and not the annual maintenance that is a part of owning a vehicle. Annual maintenance items include oil changes, tire rotations, replacing tires and flushing/filling various fluids in your vehicle. The average vehicle owner spends 1.5 percent of their annual income on vehicle maintenance each year. Be sure to factor that in when determining if a particular model is affordable for you.

Last but not least are the costs to fuel and insure your vehicle. With gas prices currently at $4 or more a gallon in the U.S., many consumers are purchasing smaller, more fuel-efficient vehicles. According to information collected by AAA, the average cost of fueling a small sedan annually is $6,735. SUVs and large sedans were the least fuel efficient, costing between $8,000 and $11,000 annually to fuel.

Vehicle insurance also is an important factor in the affordability of any vehicle. Newer models always cost more to insure than used vehicles. Insurance rates also will depend on the number of miles you anticipate driving annually, and whether you drive in a high-risk area for automobile accidents.

Once you have factored in all of these items, you will have a decent idea of just how much car you can afford.

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Published:  Tue, 15 Jan 2019 09:23:00 GMT



How Car Title Loans Work

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Published:  Tue, 15 Jan 2019 08:39:00 GMT



How Santander's Brazil unit is driving growth with car loans

SAO PAULO (Reuters) - At BM Multimarcas, a used-car dealer on the outskirts of Sao Paulo, owner Santel de Abreu Bernardo can show you jalopies that most big banks would not touch. There is a faded blu...

Published:  Thu, 10 Jan 2019 22:16:00 GMT



As Auto Industry Faces Earnings Pressure, AI Offers Promise of Savings

U.S. car sales have been strong in recent years, but auto makers increasingly are concerned about the impact of trade tariffs, high new-vehicle prices and rising interest-rates for car loans on an ind...

Published:  Tue, 15 Jan 2019 14:14:00 GMT



Why Car Title Loans May Not Be as Bad as They Seem

Car title loans can have a pretty bad reputation depending on who you ask. They are often compared to payday loans when it comes to high interest rates, predatory nature, and the fact that they are pr...

Published:  Sun, 13 Jan 2019 07:57:00 GMT



Should You Use In-House Financing From Car Dealers

Where you finance your next car can save you money or cost you money. About 85 percent of new vehicles are paid for with an auto loan, and more than half of used car purchases involve a car loan, acco...

Published:  Fri, 11 Jan 2019 12:10:00 GMT



Elderly Texans take on more debt than anywhere to finance car obsession, study shows

Texans take out some of the highest auto loans than anywhere in the nation, studies show, and that's causing Texas seniors to carry the most non-mortgage debt in the U.S. San Antonio, Austin and Houst...

Published:  Fri, 11 Jan 2019 10:42:00 GMT



Why are Personal References Important for Bad Credit Car Loans

Lenders don't collect personal references just in case they can't get ahold of you one day. Sure, this is one of the reasons they ask to have a list of family and friends on file, but it's much deeper ...

Published:  Thu, 10 Jan 2019 05:36:00 GMT



Irving subprime auto lender Exeter Finance prepares to go public

Exeter Finance Corp., an Irving-based auto lender that specializes in subprime loans, is filing to become a publicly traded company. Exeter, backed by private equity giant Blackstone Group, plans to l...

Published:  Wed, 09 Jan 2019 13:59:00 GMT



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