How Much Car Can I Afford?
Deciding that it’s time to buy a new car, especially an Acura, is definitely exciting but it can also be a little stressful. When you buy a car, you’re going to be starting all over again with a new car loan. It might not be immediately clear to you how much you can afford for car payments. The first question many people ask is, “How much car can I afford?” At your Kansas City Acura dealer, everyone is on your side. Sales people and managers want to help you buy the luxury car you desire that fits into your budget. Since it comes down to personal finances in most cases, here are a few things that can help you decide what car or SUV to buy.
What Can You Make for Down Payment? In many cases, it’s not necessary to make a down payment to buy a car. However, that doesn’t mean that you shouldn’t. A down payment does three things for you, and they’re all good:
Again, it’s often not a requirement to make a down payment, but it’s a good idea. Aim for 10 percent of the loan amount or more.
- It lowers your total loan amount.
- A down payment reduces your monthly payment by approximately $15 for every $1,000 you put down.
- It helps lower your risk profile for the lender because you already have ‘skin in the game’, improving your chances of being approved.
How Much Can You Pay for Monthly Payment? Knowing how much you have to spend every month on your car payment is crucial. You need to account for other expenses in life too. Your monthly income is the biggest determining factor for how much car you can afford, though. As a rule of thumb, your monthly payment should be no more than 35 percent of your pre-tax income, assuming you don’t have any other loans on the books. Since all your financial commitments come into play, you should use an affordability calculator to determine the monthly payment you can afford and shop within those means.
What is Your Credit Situation? Perhaps the most important factor in buying a car rests on your credit score. How responsible you’ve been with money you’ve borrowed will impact the interest rate, loan term, and price range of vehicles you can purchase through the lender. If your credit rating has taken a hit in the past, consider paying off credit cards, getting rid of other financial commitments, and ensuring you make all your payments on time, every time.
Will You Have Flex Money? You don’t want to spend all of your spare cash on your car either. There are other expenses to keep in mind like registration fees, sales tax, and insurance. Always have a buffer for the unexpected expenses that pop up in life. Your Kansas City Acura dealers want to help you get the car you want and deserve. Whether it’s a new Acura MDX, a new-to-you 2019 Acura ILX, or an older model to help you build your credit, we can help. Contact us today to get pre-approved for a car loan.