Many times we have the desire of buying the car of our dreams or simply upgrade the car we are driving now. But in the back of our mind we think, Can I really afford it? will I have a negative impact on my saving plans?
Or what’s the right amount of money for down payment, and consequently what’s the smartest decision on the length of the car loan, and the monthly payments.
Experts recommend that the first issue to consider is how much of your financial resources at this point of your life you are willing to devote to upgrading your ride opposed to providing yourself a bigger margin of financial security. The second issue is how you should pay for a new car whatever the car you might want.
In deciding how much you would devote to buy a car, it is recommended that you check what percentage of your yearly salary your car payments would represent. If such percentage gets close or higher to 10% you are probably paying too much, despite the down payment you gave away.
So at the very least you should ask yourself how taking on this new commitment on will affect your ability to save for retirement. Will you be able to pay off the car loan while maintaining your current savings rate? Or will you have to cut back?
In other words, in order to make a wiser decision, you should keep in mind that the fact remains that you’re diverting resources that could go toward enhancing your financial security into a car. So making the right decision now, will require from you to think about the future and your personal financial goals.
no comment untill now