With the ever increasing cost of new vehicles, many Americans are spending far more than they can afford on what they drive. Just because the monthly payments are manageable doesn’t mean it’s smart to let a $30,000 or $40,000 auto loan gobble up a huge chunk of your paycheck every month.
Next to buying a house or paying tuition at a fancy college, buying a car is one of life’s biggest expenses. With all the beautiful new cars, trucks, SUVs and crossovers on the market, it’s easy to get swept up in the emotion behind buying a new vehicle. When shopping for a new vehicle it’s important to remember that you have total control over how much you spend.
Financial experts warn against buying new vehicles and they discourage us from long term auto financing with high interest rates. Instead they recommend buying pre-owned vehicles with some careful planning and financial strategy. A favorite strategy is the 20/4/10 rule which suggests that a buyer make a down payment of at least 20%, finance the car for no more than four years and not let the total monthly vehicle expense exceed 10% of your gross income.
When using the 20/4/10 rule the first step is to determine your monthly gross income which is the amount of money earned before taxes and expenses are deducted. The next step is to calculate monthly auto insurance premiums. Then take 10% of your gross monthly income and subtract the monthly insurance costs for the monthly car payment you can afford to make. The 20/4/10 rule might sound a bit constricting but when applied it will help you take control of your finances and keep you out of debt.
Considering that new cars are more sophisticated than ever before (which drives up the price), the used car surplus now has much to offer. There are plenty of affordable, reliable, well equipped vehicles that may not have the latest technology but will definitely get you from point A to point B in style and comfort. Our Used Car Dealership in Lubbock, Texas has a wide range of used cars, trucks, vans and SUVs to choose from. We encourage you to do your research, review your finances and then stop by our used car lot to see all the options available now.