How to choose a car price?

Question

I've searched online and have found that I can afford a car around $17,000. Others say to buy a car based on 20% of your annual salary, which in my case would be a car of $11,500.. I'm confused since this is a big gap. How do I choose the right car price?

Here's the info I submitted:

1) Monthly Car Payment: $400
2) Loan Term: 48 Months / 4 Years
3) Interest Rate: 4.99%
4) State Sales Tax: 6.25% (TX)
5) Down Payment: $0

I lost my car because I couldn't pay it since I lost my job. I recently got a job and I'm looking to buy a car because I'm tried of riding the bus and asking for rides. I don't have any money saved up so I can't make a down payment. I don't want to lose my job due to unreliable transportation.

Links

http://breakfree.me/how-much-car-can-you-afford-the-20-rule/
http://www.edmunds.com/calculators/affordability.html
http://www.practicalmoneyskills.com/calculators/calculate/howMuchCarCanYouAfford.php?calcCategory=auto

Anonymous · Answer

I think you should use public transport if you don't have enough savings...start going office as early as possible so that the chances of getting late will become zero but if you really think that you need a car otherwise you loose your job than don't go for a car whose price is very high instead go for a low budget car. Buy a second hand car which is in good condition and start saving some money so that after sometime you can afford a new car..

ANDRE L · Answer

Your repo on your record will hurt your credit, and so, it's likely that your interest rate, and thus your monthly payment will be more.

Have you factored in what your monthly insurance cost will be, as well ? I also don't understand on what specific basis you feel that you can afford a $17K car. Based on what ?

Anonymous · Answer

If you had a repo, you wont be borrowing again anytime soon and certainly not at 4.99%.

How much money you have is how much car you can afford.

Any financing would be on terrible terms. Not just 21-29% interest but they overcharge for the car by thousands too.

Lenders don't care about you losing your job. Its not their problem.

Bill · Answer

It depends on the interest rate.  $400 for 48 mos @ 6% interest = aprox $17,000 loan.  $400 for 48 mos at 8% interest = approx. $16,000 loan.  $400 for 48 mos @ 10% interest= approx. $15,000.

Dominic · Answer

be responsible with your money. just get something cheaper and reliable. pay a mechanic to look over the entire car before you purchase it. id reccomend something more in the 7k range honeslty.

wg0z · Answer

20% is unnecessarily low.
if you're grossing 56k/year or so, you can probably afford a 17k car if that is what you want.

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How to choose a car price?

6 Answers