Buying a new or second-hand car is made easier for thousands of consumers by deciding to pay for their new vehicle with a car loan. A car loan allows the buyer to spread their payments into convenient installments, allowing him or her to buy a more expensive model than savings alone might permit. If you're thinking about taking out a car loan, one of the first questions you should be asking is how much car loan you can afford. Here is some advice from 3Birds Template on car loans.

In order to calculate how much car loan you can afford, you need to compile a breakdown of your outgoing costs. Set up a spreadsheet listing your monthly income (all sources) and deducting all your monthly outgoing costs. When identifying your outgoing costs, don't just include payments made directly from your bank: you also need to estimate your monthly bills for essentials such as food, fuel, and household goods, leaving you with the real value of your disposable income. Once you have this magic figure, you need to decide how much you are prepared to dedicate to a car loan and for how long.

Once you have this value, you can use online tools to work out the maximum affordable value of a car loan. Our finance department is one such resource—you can even apply for financing online and get pre-approved before you ever set foot in our dealership! The loan term is an important consideration. Spreading the loan over a longer period helps reduce the monthly cost, but increases the amount of interest you pay overall. Car loan calculators also ask for the annual interest rate, as this helps determine the total value of the loan you can afford. 

One other assumption can help set the value of the car loan you can afford. You may have a car to trade-in, a cash deposit, or some other form of rebate you can put towards the cost of the car. As this money will not need to be borrowed, it can offset the percentage of the value of the car you need to finance through a loan. By adding the value of the loan to some other form of down payment, you can increase the value of the car you buy without borrowing any more money. Click here to value your trade online or contact us if you have other questions about finding the perfect car to fit your budget.