Auto loan: What can I afford to pay?

Finding an affordable car loan is an essential part of financing your car.

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To do this, there are some key elements to pay attention to make the smartest choice!

Financing options for you

1. Dealer Financing

When you finance your car with a dealer, it becomes very convenient to have all your official papers managed and signed at the same place. You can also have access to competitive commercial rates, like zero percent financing.

However, you expose yourself to vendors often led by commissions. It is likely that you feel pushed or influenced to buy some extras you did not need at the base. Dealers do not always offer the lowest interest rate, which has a big impact on what you will pay in the end.

2. The financing of banks and cooperatives

Unlike dealers, banks and co-ops are more honest when it comes to discussing options with you. Interest rates are much cheaper than those of a dealer. Depending on your credit rating , however, banks and cooperatives have the option to refuse your application.

3. The rental

Renting your vehicle is another attractive option, while monthly payments are generally lower than other financing options. However, when your rental comes to an end, you must return the vehicle and pay the remaining charges, unless you have an agreement that gives you the option to purchase the vehicle.

In order to avoid additional costs, you must be vigilant with the mileage and damages, while you maintain an insurance plan approved by the company that offers you the lease.

Monthly saving plan

Considering all your expenses is one thing, but writing them and concretely adding them up is another. Before thinking of making another expensive purchase, make a monthly spending plan that will serve as a personalized visual that you can refer to.

Start by calculating your monthly income and write all your expenses at least, not to mention the price of taxes. Subtract all these costs from your monthly income. The final figure will give you a better idea of ​​how much money you have left to finance your new vehicle.

At this point, you can decide whether or not it is worth adjusting your monthly expenses to allow you to pay for your next expensive purchase. This monthly savings plan will provide you with a realistic perspective on how much money you have left to pay your loan on a monthly basis.

Choosing a financing plan that you can afford is an essential part of financing your new car. Take your time and consider all possible options before making an official decision.