Even though the best way to buy a car is by cash, most people buy with monthly payments. When deciding how much you can afford, there are a few things to consider. Most advertisements say a certain amount down and monthly payments, but if they are extended over 4-6 years you can end up spending much more on interest. Some experts say if you cannot pay off the car in 3 years or less, you cannot afford the car.

Along with monthly payments, other costs to keep in mind are insurance costs, gas mileage and licensing costs. In most cases, it will cost more for insurance and licensing costs for a newer vehicle. Sometimes, a newer car will get better gas mileage, unless you buy a larger vehicle or pickup.

Also, think about what your needs are. It may not be necessary to buy a larger vehicle with lower gas mileage if you don’t need a larger vehicle very often.

Another thing is some people go shopping for a car when they still owe on their current one. The salesmen are handy and roll the current payment into the new one. With this and other circumstances, sometimes people end up owing more on their car than it is currently worth.

So while having a vehicle is usually a necessity, with a little time and research it doesn’t have to break the bank.

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