Used Car Financing Advice
Having an Auto Finance Strategy
Do you need to finance a used car? Don't be one of these buyers who fails to take some time to calculate the precise amount of money they should invest in a used car. Ask anyone who has taken on a car loan before - if you neglect to set up a budget, it's all too easy to find yourself in too deep. Problem is, too many people are clueless as to the rules they should be following. That's the reason for this hub - to review solid auto financing strategies, principles, and advice. This stuff is basic - but far too many people neglect to keep it mind.
Income Versus Loan Amount
There is - or at least there should be - a very strong correlation between how much money you make each money and the size of your auto loan.
Let's look at an example state: Wisconsin. Wisconsin ranks 31st as far as income. Consumers in the state bring in $38,050 a year on average. Here's the important part: you'll want to spend only 20% of this amount (your annual income) on a vehicle yearly.
But don't forget, it's important to add to the equation such things as insurance coverage and the cost of gas. To illustrate, a car insurance policy costs Wisconsin residents about $819 each and every year, or $68 per month. After subtracting an additional $100 for filling up at the pump and performing routine service, you have just $403-$466 each month for paying off your auto loan (if you were a typical Wisconsin resident).
How Much Car Can You Get?
Curious about what kind of car will fit your budget with a monthly payment of $466?
This is how much you could afford if you finance for...
- 36 months: $16,782
- 48 months: $22,37
- 60 months: $27,970
- 72 months: $33,564
But lest we forget, you will need to take into account your interest rate. Of course, you could possibly devote $33,564 during a 6 year period, but the amount you pay to the car loan company could quite possibly make up thousands of dollars of that amount. As an example, for a $28,500 car financed for 60 months at 6% interest rate, you would be required to pay over $4,500 in interest ($33,000 total). If you financed that same car for only 36 months at the same 6% interest rate, you would save about $1300 in interest over the life of the loan.
Helpful Resources
- Auto Loans Wisconsin
This auto financing site allows you to get pre-approved for a Wisconsin auto financing contract from the convenience of your home computer. It also includes a loan calculator and more budgeting information. - Car Loans Utah
This is a good site for Utah residents who need to finance a new or used car. They are receptive to those with below-average credit, and the form is secured via HTTPS. - Auto Financing Calculator - CarCredit.com
This is an uber-helpful auto financing calculator that is miles above the rest in terms of its advanced features. It helped me to write this hub, and it can help you finance your next car.
