Car Loans

Ideally, car buyers could all purchase their vehicles with cash, but that isn't a luxury that most people can afford. The rule of thumb is that you shouldn't spend more than 20 percent of your monthly net income on cars. Some take this rule a step further, saying that you shouldn't spend more than 20 percent of you income after basic expenses such as taxes, rent/mortgage and utilities.

The best thing to do is to save up some money so you can have enough for a down payment on a car. The more down payment the buyer has, the lower the monthly payment. However, if you have an old clunker and it breaks down, you may not have much of a choice in the matter. Try to spend some time shopping around, and buy a pre-owned vehicle that is not so old that it will break down frequently.

Also, try to find a low interest loan. Just one percent interest can save you a few hundred dollars over the course of the loan. For example, if you purchase a car for $15,000, and have a 7 percent interest rate over a five year period, your monthly payment will be $297.02. If you drop that interest rate to 6 percent, your monthly payment will be $289.99. Over the course of five years, this could save you about $420.

Links

bankrate.com

This Web site has all types of calculators, and may often be best known for its mortgage calculators. But it also has information about how much of a monthly car payment you can afford. It has loan calculators that can guide you through several scenarios. It will show you how much time you'll save if you put a little more money in principal each month.

tcalc.timevalue.com

This site also has a variety of calculators - mortgage, personal finance, investment, retirement and lease calculators. The car affordability calculator is one of the personal finance calculators. It allows you to put enter down payment amount, trade-in value, loan term and interest rate. It will also show you how much you'll pay in interest over the course of the loan.

autos.msn.com

This site has calculators based on how much a new car buyer can afford for a new vehicle and how much his or her monthly payment will be. It also has an article about how you can estimate your monthly payments, figure out your buying power, and know your monthly limitations.