Besides your home, one of the most expensive purchases you will make is a vehicle. When shopping for a car, it is important to know how much of a monthly payment you can afford, if you need to borrow the money. Here is a calculator from MSN Money to help you determine what kind of monthly payment you can afford. Along with the monthly payment you also need to consider the costs of interest payments, tax/license, gas and repairs/maintenance.

Some experts suggest not to spend more than 20% of your net take home pay on car payments. Another rule of thumb I have heard of is that if you cannot pay it off in 3 years, you may not be able to afford the car.

Also, when shopping for a vehicle, consider what kind you need and what it will be used for. If you plan on putting quite a few miles on it, consider the gas mileage.

The monthly payment may not seem like a lot, but you need to take into consideration the other monthly payments you have. A variety of monthly payments can add up quickly.

Nancy Kvamme

One thought on “How Much Car Can You Afford

  1. R
    December 21, 2011 at 7:54 am

    One can not afford a car if you can’t buy it without taking out a loan. There are plenty of good used cars with low millage.