Financing a new car requires some research on your part. Before venturing out to the car dealerships uninformed, take a look at what you will need to know about the car buying process. First of all, about 70% of all new car purchases are financed. So unless you plan on paying cash for your new car, or you are going to apply for a car loan, and the likelihood is that you will be financing your purchase. This is the first and most important step in the car buying process. You must know how much you can spend before you can determine what you can afford.First of all, you need to have a monthly budget planned. This is very easy to calculate because you simply add up all of your fixed monthly expenses, such as your rent/mortgage, phone bill, etc. Subtract that from your net income. Then subtract your estimated extra expenses, such as food, gas, and entertainment. The result should be an amount of money you have to play with. From that, you need to remember that buying a car involves more than a down payment and monthly payments. In your budget you will need to include licensing, registration and other hidden costs, as well as monthly insurance costs, gas and maintenance.
Once you have all of this worked out, you should have a general figure of the budgeted amount you can use for car payments. A good rule of thumb is that roughly 20 percent of your net income can be used for a car payment. Once you determine that figure, stay with it and don’t get talked into deferring form your original budget or the repot man could be visiting you when you need your car the most. Since you will be depending on your car for your daily activities, buy a car that suits your budget. That is the whole purpose of choosing the right financing option. Get all of your agreements in writing and keep a copy so that you don’t the screwed later.