How Big A Car Loan Can You Really Afford?

Finding a cheap car loan enables you to upgrade your existing vehicle, or buy your first car. It will be more convenient than getting the bus, and you will be less dependent on others because you won’t have to ask for lifts everywhere. However, it is vital that you choose a cheap car loan that you can really afford, otherwise you could find yourself in financial difficulty when it comes time to make your regular monthly repayments.

Income

Consider all of your income. As well as any salary you receive, don’t forget to include benefits, interest, dividends, and other payments that you receive. As long as these are guaranteed, then it is reasonable to consider them a part of your income and equally reasonable to include them in your car loan calculations. If they aren’t guaranteed you may want to exclude them in order to be on the safe side.

Expenditure

As with your income calculations, you should include every expense and piece of expenditure that you have, and that you will have. Once you have a car, you will need to pay for things like road tax, MOT, and car insurance, and you won’t be able to get anywhere if you haven’t budgeted for the petrol to fill your tank. Regular maintenance is also important, because many car loan companies demand that the car be kept in good condition.

Car Loan Calculator

Use the Like Car Finance car loan calculator to determine how much you are likely to be able to borrow and match this to the amount that you have budgeted for your monthly repayments. If you only intend to keep your car for a couple of years, bear this in mind when determining the term of your loan. If you take out a five year loan, and you want to upgrade after two years, you will have to repay the outstanding capital plus any interest and early repayment charges.

Do You Really Need Top Of The Range?

One way of ensuring that you get the best value for money for your circumstances, when choosing a cheap car loan, is to opt for the level and trim of car that you actually need. Do you need the biggest engine size, body kits, and latest sat nav and audio equipment?