Financing & Budget Tips

We've gathered some helpful car financing tips, whether you're a first-timer or just brushing up on things before buying your next car.

HELPFUL CAR FINANCING TIPS

  • Choose a car at a price that fits your budget: If you're not sure what price range you're looking for, try our Car Payment Calculator to estimate your monthly payment ahead of time.
  • Maximize your down payment: Increasing your down payment lowers your monthly payment and may improve your offer and chance of approval.
  • Estimate what you can expect at trade in: If you're planning on trading your car in, having an idea of its current equity can help you estimate what car payment you can afford.
  • Have a monthly budget: Most financial institutions recommend that you spend no more than 15% of your gross monthly income (GMI) on your monthly vehicle payment. Examples:
      • $2,000 GMI = monthly car payment of $300 or less
      • $4,000 GMI = monthly car payment of $600 or less

Car Financing Terminology

  • Amount financed: the amount of credit provided to you.
  • APR: Annual Percentage Rate, or APR, is the cost of credit expressed as a percentage.
  • Down payment: the amount of cash or trade equity you apply to your purchase.
  • Equity: the difference between your trade payoff balance and its value. It may be positive or negative.
  • Finance charge: the total dollar amount you pay to use credit.
  • Retail installment contract: the finance agreement allowing for payment over time at a fixed monthly payment amount and rate.
  • Simple Interest: finance charge calculation based on the unpaid principal balance, number of days between payments and the APR.
  • Stipulation: additional documentation/action required to complete the transaction, like proof of income.
  • Term: the number of monthly payments provided for in the retail installment contract.
  • Total of payments: the amount you will have paid after you have made all payments as scheduled in the retail installment contract.
  • Total sales price: the total cost of your purchase on credit including finance charge, down payment and amount financed.
{"Finance-Application":{"WhiteList":[7106,7242,6021,7103,7104,7117,7243,7171,7197,6042,7150,7284,7218],"BlackList":[]},"Finance-Application-CoApp":{"WhiteList":[7117,7106,7171,7150,7218,7284,7242,6042,6021,7103,7104,7243,7197],"BlackList":[]},"Finance-Application-Suppress-Search-Results":{"WhiteList":[7106,7171,7197],"BlackList":[]},"Home-Delivery":{"WhiteList":[7106,7171,7197],"BlackList":[]}} {"HP Article Promo":{"Regex":{"__interceptors":[{}],"Regex":"[0123456789abcdef]$"}},"Prequal":{"Regex":{"__interceptors":[{}],"Regex":"[0123456789abcdef]$"}}}
{"auto-address-switch":{"Enabled":false},"holdformvariantswitch":{"Enabled":false},"paidsearchurlitemsavingswitch":{"Enabled":true},"prequal-employment-and-income-switch":{"Enabled":false},"prequal-monthly-payment-preview-switch":{"Enabled":true},"prequal-on-calculator-switch":{"Enabled":true},"prequal-overtime-rate-switch":{"Enabled":false},"prequal-section-one-variant-switch":{"Enabled":true},"recommendedvehiclessearchresults":{"Enabled":true},"rendermakemodelresearchresultsonserver":{"Enabled":true},"rendermakemodelyearresearchresultsonserver":{"Enabled":true},"rendermakeresearchresultsonserver":{"Enabled":true},"research-pages-redirector-toggle":{"Enabled":true},"robots-txt-toggle":{"Enabled":true}}