Car Buying Revealed by Brian Munroe

Author:Brian Munroe
Language: eng
Format: epub
Published: 2019-02-25T16:00:00+00:00

Source: Salary.com

Above are examples of average income levels of some common positions. It shows how the salary can be figured into the income after taxes (known as your “net” income). From that you can figure out what 20% of your monthly net income is. This is the high end of the amount of money you should spend monthly on your vehicle payment. This amount is not what you can spend on one car, but your total car payments from all the cars you own. It also shows how much that 20% will allow you to finance over 60 months (5 years) with no money down using an average finance rate of 5.9%. Your final rate will depend on your credit score which I will discuss later in this book. As you can see the higher the income, the more you can finance. Spending any more than 20% of your net income may cause you to not have enough money for other basic necessities of life.

When you look into the long-term costs of owning a car you need to include one very important item, car insurance. Most people are so preoccupied with the car they are buying that they forget to call their insurance company and get a quote on the car they are looking to buy. Depending on the car you are buying, your insurance costs could go up a great deal, especially if you are buying a new car. Generally speaking, the newer the car, the higher the insurance costs. These costs need to be figured into your monthly expense for your car. Add what you pay now for a car payment and car insurance together and that is your total cost of your car per month. If you pay your insurance every year then divide it by 12 in order to figure out a monthly cost. Compare it to what you are paying now to see if you can afford the jump in costs. For example, check out the surprising ranges in insurance costs in the following table.

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