How much can I afford to borrow when purchasing my next vehicle?

A very common question among car buyers is, “How much can I afford to borrow?” There are a few simple steps anyone can follow to get a number in less than twenty minutes.  First, you need to come up with a basic household budget.  Write down how much you spend on essential items each month, including food, living space, utility bills, clothing, entertainment, etc.  Always round up if you are unsure of the actual cost or if the cost fluctuates.  Then, write down your net household income and subtract your expenses.  You should get a number of what you could spend on anything.  Subtract some more from that for savings and emergencies, and you will have the exact amount you can spend on a monthly car payment.

Then, conduct a simple web search to find out how much you can borrow while sticking to a monthly payment you can afford.  Type ‘how much can I afford to borrow in Canada’ into any major search engine and you will find numerous loan calculators from major banks, most of which are very easy to use.  Keep in mind that you will typically get an estimate, and it might be a little off.  For example, if you could afford a monthly payment of $400 and it was estimated that you can afford to borrow $29,500, it might be wise to borrow around $26,000.  Remember, the most important thing is that you have asked yourself ‘how much can I afford to borrow’ before you went car shopping.  There is little worse than being stuck with a vehicle that you cannot make payments for on time.  When you blindly take out a car loan in Kamloops, you risk basically throwing money away on late fees.  This can easily be avoided by thinking about your financial situation beforehand.  Remember, there are more important things than buying your dream car tomorrow, and always be ready to walk away from a loan that you cannot repay.

You can use our car loan calculator to figure out your payments. At Loan Doctor you can get a car loan in Okanagan, we can get you approved for your car financing regardless of past credit issues. Apply online today, and one of our credit specialists will call you!

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