Think and ask yourself “What can I afford?”

Prepare yourself with a wish list of the things you want. Naturally we all want to spend as little as possible, but we all have things we can’t live without. What if you have 3 children? You might consider a SUV vs. a subcompact. What if you were towing a trailer? A truck might fit your needs better. What if the vehicle didn’t have leather seats? Would you walk away from the deal? Factors such as this will determine how much you’re going to spend on your next vehicle.

All the little toys and gizmos we add on the vehicle do add up. Check out the manufacturer’s websites to see if what you’re looking for comes in a package for the vehicle you have in mind. It can save money if it can come in a package.

What can I afford? Be honest with yourself. What is your income after taxes? Dealers will want proof of this income, so be prepared to bring in current income statements and other documents as well like a utility bill. If you’re married, include your spouse’s income. Figuring all this ahead of time can help you decide if you should shop new or used cars in Ontario.

Subtract all your monthly expenses include things like

• Credit card payments
• Utility bills
• How much you spend on currently gas
• Insurance
• Shopping, travel, dining out
• Kids tuition
• Setting money aside for your savings

What is left over will help guide you with your payment

You will need a down payment. Lenders like to see at least 20% of the loan amount. You can figure for every $1000 you put down, estimate about $20.00 will come off your monthly payment. Obviously, the more you put down the lower your payment. This is especially important if you have damaged credit.

There is no perfect answer on how much to spend on a vehicle. Understanding and being honest with yourself will help you answer this question for yourself.