How to Purchase an Affordable Car

Buying a car for reliable transportation doesn't imply buying a car that's outside your budget. Spending more on a car than you can afford can impact your monthly finances and limit what you're able to spend. Know what you can afford before shopping and purchase an affordable car.

Instructions

1

Determine how much you want to spend. Have a price point in mind before talking with dealers and auto lenders. Review your income and present expenses and decide what you can realistically afford. For example, if you can spend $400 a month on a car payment, you can likely afford a car priced around $20,000.

2

Pull out financial documentation. A bank ultimately decides how much you can spend on a vehicle. Banks reach this conclusion after reviewing bank statements, W-2s or tax returns. Gather these documents and give them to your lender when applying for a loan.

3

Get pre-approved for a loan before shopping. Submit your employment and income information to a bank or credit union to get pre-approved for an auto loan. Based on the provided information and your other debt payments, your auto lender will pre-approve you for a specific auto loan amount.

4

Narrow down cars within your reach. Once you're pre-approved, create a list of possible cars within your financial reach to test drive.

5

Lower your car payment with a down payment. Knock down the amount financed with a bank by supplying a down payment -- whatever you can afford. For example, if buying a $20,000 car, providing a down payment of $5,000 reduces the auto loan to $15,000, and this reduction can create a more affordable car payment.