Wondering if you’re ready to buy a new car? Our Toyota finance experts at Sansone Toyota have a few tips to help you budget for your new purchase and determine how much to spend.
Start by Looking at Your Expenses
Before you start shopping, it’s important to review your current expenses. Experts recommend keeping your debt-to-income ratio under 36%. Start by calculating your debt (including your mortgage or rent, credit card payments, and other debt) then divide it by your gross monthly income.
Check Your Credit Score
It’s also a good idea to check your credit score. Your credit can impact how many loan offers are extended to you and the interest rate you secure. While poor credit won’t always keep you from getting a loan, if you can improve your score before shopping it will certainly be beneficial.
Determine Your Budget
Next, you want to determine what you can (and should) spend on your monthly payment. It’s best to keep your monthly auto expenses under 20% of your take-home pay. This includes your car payment, as well as costs for maintenance, insurance, and fuel.
Our auto payment calculator on our site can help you estimate what your monthly payment will be. You just need to add in a few factors:
- Loan amount
- Down payment
- Trade-in value
- Term (in months)
- Interest rate
Consider Your Down Payment
While it isn’t an absolute must, experts suggest that you plan to make at least a 20% down payment. This can be a cash payment you make upfront or you can apply your trade-in value to your loan. Our team is happy to assess your vehicle anytime to give you an estimate of your trade-in value.
Ready to start shopping? Contact our team with any other questions you may have or to get started with the car-buying process today!
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