Automobiles are more expensive than ever.
Whether you’re looking to buy something new or used, you’re going to have to fork over a lot of your hard-earned money to get a car. The average price of a brand new car in the US is now well over $45,000, which is more than a lot of people make in a year.
So, how do you afford a car?
In this post, we’re going to examine how to afford a car by looking at some of the best financing options available. Keep reading and you’ll be behind the wheel of your dream car before you know it.
First, Figure Out What You Want
Before you start looking at how to afford a car, you need to figure out what it is you’re trying to afford. The first decision you’ll have to make is whether you want to buy a new car or a used car.
It should be said that used cars are also coming up a great deal in price. To get something that will last you a long time, you’re still going to have to pay around $30,000. If you’ve got a used car that you’re willing to trade in, you can knock the price of your new car down a bit.
Once you know what car you want and how much it’ll cost you, you can start budgeting. A big purchase like this will probably require you to stick to a budget and cut down on some of your expenses.
There are countless budgeting tips out there, but one of the better ones is the 50/30/20 method. This says that you should use 50% of your monthly income on your needs, 30% on your wants, and 20% go into your savings. After several months of this, you may be able to finance your monthly car payment.
Consider Your Auto Loan Options
For a faster way to afford a car, you can look at auto financing options. You can obtain a loan from your bank or other lenders, like favorableloan.com, which may approve your loan in a matter of minutes.
The key with car loans is to put down enough money so that your loan doesn’t go upside down on you. This is when your asset (the car) is worth less than the loan you’re paying off. Putting down 20% will help lower your monthly car payments, as well as prevent you from getting a loan you can’t afford.
Another thing to consider is the term of the loan. The longer the term, the more interest you’ll be paying and the more expensive the car ends up being. Try to stick to under 48 months.
Learning How to Afford a Car
If you’re worried about how to afford a car, then just sit down and consider your options. You can always supplement your car payments by getting a part-time job or cutting out frivolous spending, but it’s going to take time. A loan is riskier, but if you need a new car, it might be the best move.
As long as you don’t spend beyond your means and use the tips we’ve provided here, you’ll be cruising around in your new car in no time.
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