Recently, we shared a blog post that provided advice about applying for an auto loan. As a follow up to that post, we thought it would be a good idea to give you some tips about creating a budget to buy or lease a vehicle. See? There’s no reason to think, “I wish I could locate a Mazda dealer near me who can provide some financing advice,” because we’re full of actionable tips.
While you may be eager to head out and start shopping for vehicles, it’s wise to create a budget before you even leave home or start researching models online. This is where the 10-20% and 36% rules can be quite helpful.
In general, it’s advisable to devote a maximum of 10-20% of your earnings to your total automotive expenses. If you make $5,000 per month and follow this rule, you’ll have $500-$1,000 to spend on transportation costs every month, including your loan or lease payment.
A lot of finance experts will advise you that the amount you pay toward debt every month shouldn’t exceed 36 percent of your income. Add your monthly debt payments up and subtract the total from 36% of your income. The result is the maximum amount you’ll be able to use to cover your automotive expenses while adhering to the 36% rule at the same time. If your monthly debt service is $1,000 and you make $4,000 per month, this is the equation you should use: ($4,000 x .36) – $1,000 = $440.
Once you know how much you can afford to spend, you should use the Payment Calculator on our website. By using this tool, you can get a feel for what your monthly loan payment might be and an estimate of your purchasing power.
For more help with creating a car budget, contact the pros in our Mazda finance center near Evansville, IN. To find a Mazda vehicle you’ll love, visit Champion Mazda now.
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