If you’ve decided to buy a car, you’re already ready for a sizable financial commitment. But how much can you actually afford to spend on a new or pre-owned Mazda car? This is an essential Mazda finance question to answer before you fall in love with one of the cars on our lot.
Formulas
When choosing your new Mazda vehicle, you should keep in mind the ten percent rule. We recommend you spend no more than ten percent of your monthly income on your car loan payment, and no more than twenty percent on total car expenses, including gasoline and repairs.
This goes hand in hand with another useful formula involving ten percent. A simple way to estimate the extra fees, taxes, and other payments you will have to pay when purchasing a vehicle is to increase the price of the car by ten percent.
So, if you make $80,000 a year, you can afford to spend $8,000 on car payments per year, or $666 per month. However, when calculating a car’s price, you need to add ten percent for fees, meaning you can really purchase a car with up to a monthly payment of $600 per month.
Total Debt
Another useful rule: you probably shouldn’t spend more than 36 percent of your gross monthly income on debt. By this standard, if you already have a large amount of debt, you should think about spending less on your car.
If, for example, you make $4,000 a month, you could afford to spend $1,440 on debt. However, if you already spend $600 on debt, this leaves you with only $840 to spend on car-related expenses. This, like the other “rules” we’ve mentioned, are flexible — just keep them in mind so you’re not at risk of leaving our dealership with an empty wallet.
Our Mazda finance experts will help you with all these calculations. Come down to Springfield, IL and visit Green Mazda to find a new or used car you love!
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