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There Is No Set Limit On How Much Car You Can Buy, But It Is Recommended To Spend No More Than 15% Of Your Monthly Payment On A Car Payment

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Written by: Daniel Robinson, Written by: Daniel Robinson Writer Daniel is a team writer for the Guide and has written for a number of automotive news sites and marketing companies in the US, UK, and Australia, specializing in the topic of car finance and care. Daniel is the Guide team’s authority on car insurance, loans, warranty options, car services and more.

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Edited by: Rashawn Mitchner, Edited by: Rashawn Mitchner Managing Editor Rashawn Mitchner is a Guide team editor with over 10 years of experience covering personal finance and insurance topics.

Buying a new or used car can come at a great price. According to Kelley Blue Book, the average new car price will top $46,000 in January 2022, while the average used car price will be $27,000. With such a high price, you may be asking, “How much car can I afford?”

Our Guide Team will explain how much you should pay on your car loan and your options for buying and financing a new or used car. When you’re shopping for a vehicle, it pays to compare the best car loan rates and the best car refinance rates from providers.

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All APR figures last updated on 7/14/2023 – please check our partner sites for the latest details. Rates may vary based on your credit score, credit history and loan term.

The Guide Team is committed to providing reliable information to help you make the best decisions about financing your vehicle. Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to rank the best car loan companies. We collect data on dozens of loan providers to rank companies on various ranking factors. After 300 hours of research, the final result is an overall rating for each provider, with the company scoring the highest points on the list.

Calculating the number of cars you can buy can help you save time and money in the long run. Several factors affect car loan rates, including:

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Financial experts recommend spending no more than 10% to 15% of your monthly salary on car loan payments. This percentage does not affect the total cost of the car, including gas, insurance, repair and maintenance costs.

Use your annual income as a starting point to calculate how much car you can afford based on your monthly payments. The table below shows an example of the annual salary and monthly payment amount that should not be exceeded for a car loan.

Also, it’s important to be realistic about how long you want to make your monthly payments. Most loan companies offer terms between 24 and 84 months for used and new cars. Choosing a longer loan term can help you get a lower monthly payment, but you’ll pay more overall because of the additional interest that accrues.

Before buying or leasing a vehicle, consider how much it will cost you in fuel and the cost of car insurance. Both costs are highly dependent on your circumstances, such as your location and driving history and the vehicle you choose.

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The US Department of Energy provides a detailed list of fuel economy figures as well as a comparison tool that allows you to check the estimated annual fuel costs of different vehicles.

For car insurance quotes, contact the agent or insurance company you are interested in. You can easily get car insurance quotes from companies to find out what you will pay. When calculating your monthly car payment and total expenses, try to keep your total expenses less than 20% of your monthly salary.

Once you’ve calculated an affordable monthly payment, you can start determining how much you can afford to borrow. The amount the lender will allow you to borrow depends on several factors, including:

The total loan amount calculated for your car may not be the price you pay. When shopping for a car, pay attention to details other than the sticker price. In most states, you must pay sales tax and fees whether you buy a new or used car.

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Paying down or trading in your old car can help you borrow money when buying a vehicle.

A car loan calculator can help you determine the monthly payment and total cost of a car loan you can afford. It uses factors such as the loan term, down payment and interest rate. Some calculators may include sales tax, fees and the current vehicle exchange rate.

* Calculators used on this website are provided for educational purposes only. Data will not be collected or stored. The results are estimates based on the information provided and may not reflect the actual price of your quote.

There are several ways to finance a car purchase, including through a bank, getting a loan from a dealer or using a third-party loan provider. We will explain each in more detail below.

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Traditional lenders like banks and credit unions often offer lower rates or special deals to people with bank accounts. If you have a good track record with the bank, they can give you a letter stating that you are approved for a loan. You can then use the letter to buy a car or negotiate with other lenders for a better deal.

Most car dealers, especially those affiliated with manufacturers like Ford, Honda or Toyota, work with lenders who arrange car loans for qualified borrowers on the site. Some dealers also offer loans through national and regional banks that provide automotive financing.

When you sign up for a loan at a dealership, your monthly payments will be sent to the partner bank or finance company that supports your loan. Your vehicle title will be sent to you once you have paid off the loan.

Third-party loans offer a faster approval process than standard auto loans and more flexible terms to meet your needs and help you get the vehicle you want. Buyers with bad credit who can’t get a loan through traditional means may be able to find third-party auto lenders willing to lend money.

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The biggest downside to using a third-party auto lender is the interest rate you’ll pay. Most third-party loan providers require higher returns than traditional lenders like banks or dealerships.

If you’re on a tight budget, explore all your options before buying a car. Several options are available, including leasing or buying a used or new car.

Car rental allows you to rent a car from a dealer for a certain period of time and mileage. It can be a good option because the monthly payments are lower than those who buy the car outright. However, remember that you have limited mileage and the money you pay for your car will not give you anything in value.

Buying a used car gives you more freedom than renting a car. Used cars tend to cost less than new cars, making monthly payments more affordable. In addition, car costs such as insurance tend to be lower for used vehicles.

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If you’re looking to finance a new vehicle, do your research so you know the make and model you want. Knowing the car’s fair market value will help you negotiate the best deal at the dealership.

While there is no set limit to the number of cars you can buy, there are many guidelines that financial experts recommend. You can calculate how much you can afford manually through our steps or use our affordability calculator. Before choosing a car loan provider, make sure you explore your options to find the best deal.

Shopping around with car loan providers can help you get lower interest rates. Most banks, dealers and third party loan providers will provide free quotes. We recommend reaching out to Auto Approve for a free quote on car loan rates.

We named Auto Approve one of them

What Is A Good Credit Score To Buy A Car?

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