NBSB Gives Tips to Figure Out How Much Car You Can Afford
Buying a new or used car can be a fun and exciting experience regardless of whether you are buying your first car or are a car buying pro. North Brookfield Savings Bank’s Consumer Lenders are ready to answer your questions and help get you the auto financing needed to get you on your journey.
However, before you begin to visit dealerships and pick out your dream car, it is important to consider how much car you can afford. North Brookfield Savings Bank has compiled a few tricks to help you determine your car buying budget, which in turn will help you to feel more confident about your choice and prepare you for the expenses and payments you will encounter. And as always, contact any of our Consumer Lenders, or visit a branch, and we will be more than glad to answer your car buying questions.
Calculate Your Income and Expenses:
Before purchasing a car, you should take a good look at your income and expenses. You should calculate 43% of your monthly gross income, before deductions, and then minus any expenses. This will leave you with the amount that you would have remaining in your budget for a car payment. The expenses to be subtracted include major expenses such as mortgage payments or rent, in addition to smaller monthly payments for credit cards and other loans.
Save for a down payment
North Brookfield Savings Bank will finance up to 100% of your vehicles purchase price plus sales tax on certain new and used model years. View our auto loan rates to see which model years apply.
However, by saving and putting a down payment down, you will lower your monthly payment and make payments more manageable to fit in your budget. If you are beginning to save for a down payment, you can learn more about how to stay motivated while saving with NBSB’s article “How to Make Progress with Your Savings Goals No Matter What.” You can also contact or visit a branch to open a Life Goals Savings Account specifically to help you reach your down payment savings goals.
Finance Your Car for a Shorter Term
This is a balancing act and you have to choose a term length that will fit your specific situation. North Brookfield Savings Bank’s Consumer Lenders can answer your questions and help you determine which solution will fit your needs.
While a longer term on your auto loan might lower your monthly payments, it also increases the total amount you will pay in interest over time. The shortest term may not be feasible for all circumstances so it is recommended to choose the shortest term that you can comfortably manage when looking at your budget. View North Brookfield Savings Bank’s auto loan rates to see all of your term options.
Consider All of the Costs of Owning a Car
Car ownership entails more than just the amount you purchase it for and pay monthly. It is important that you also budget for other costs associated with owning a vehicle, like maintenance, repairs, insurance and gas. It is generally recommended to keep total transportation costs (this includes monthly car payments as well as gas, insurance, maintenance, and other costs) to around 10% of monthly income to ensure that you won’t be sacrificing too much of your pay. Keeping all of this in mind will not only help you determine what you can afford but what kind of cars you should be looking at.
Go in Prepared Knowing Your Wants vs. Needs
The more prepared you are when you enter a dealership the more likely you are going to leave with a car that fits your needs and fits in your budget. If you live where there are harsh winters, you may need a vehicle with all-wheel drive. Do you have a growing family? Maybe you need seating that fits seven and you need to know the vehicle has good crash tested safety ratings. If you have a long commute to and from work you should make sure your gas mileage won’t be outrageous.
If you have “wants” on your list such as, has a sunroof, or a great sound system, you should consider these items so that your choice of vehicle will better fit in your budget.
By pinpointing what your “needs” are, you can narrow down the vehicles that fit those needs and are within your budget. Congrats! You are now walking into the dealership as an educated buyer. Who knows? Maybe you will find, test drive and buy a vehicle in your budget that fits some of your “wants” in addition to your “needs”.
By getting pre-qualified, you can walk into a dealership feeling confident that you know how much you can receive financing for. It gives you a firm number to work with and empowers your negotiations. You can speak with one of our Consumer Lenders to learn more about the pre-qualification process.
A car is an important and large purchase, hopefully one that will be with you for years to come. So, never feel pressured to make an immediate decision or purchase. Take the time you need to be sure of your choice. As always, we are here to help at North Brookfield Savings Bank, and our Consumer Lenders are ready to help you obtain the vehicle financing you need to get you on the road.
View Rates, Learn More about our Loans, and find other helpful resources in our Auto Loan Resource Center.