If at this point you really need a car for your mobility while you do not have enough money to buy it in cash, then the options that you can do is to get the car loan. Before you apply car loan, it helps if you first calculate how much your ability for car loan:
1. Know the basics of auto loan
Before you decide to apply car loan, it is better if you know the basics of car loan. Usually the monthly payment for the car loan should not be more than 20% of your income, because there are other needs besides car loan you must meet, in addition you will need other expenses like car insurance and car maintenance costs. If the monthly payment is more than 20%, then this could cause trouble for you. Many financial advisors believe that buying a car is not a good investment, because the value of the car will drop each year and you will spend some of your money for your car.
2. Determine what kind of car you want
The second thing to be taken into account when calculating your auto loan is a type of car you want. You need to know how much money you can use for your car loan without having to disturb your needs every month. Maybe this time you will not get the car of your dreams, but at least you will be permitted to move by having an own car. If at any time you have enough money, there you could buy another car to your liking. Type of car you choose will determine your next expenses. There are some cars that cost a lot more to maintenance than other types. Besides, the type of car will also determine how much money you must pay for your car insurance. If you decide to buy a new car, the warranty will cut your spending more than if you buy a used car.
3. Calculate auto loan payments
To calculate how much your monthly payment to pay off your car loan depends on how large a down payment you have, how much the interest rate offered by banks, terms of loan you get and how much price of the car you want to buy. By providing a larger down payment, then this will mean that your monthly payment will be smaller.
In addition to the above, the price of gasoline can also be a consideration when you decide what kind of car would you buy and also to calculate your auto loan. Make sure you always think realistically when you determine what kind of car would you buy and choose a car that is not going to spend a large portion of your income every month.
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