First Step in Buying a Used Car - Determining What You Really Need Before you do any research on the pre-owned vehicle youll want to figure out temp car insurance how much you can pay for to pay. The general general guideline is your monthly payment shouldnt exceed 20% of the monthly acquire pay (not your gross income). This rule relates to car payments all together. If you are making payments on two vehicles, the complete in the payments for both vehicles shouldnt exceed 20% of ones monthly net income. Knowing how much car you really can afford is very important because it could keep you from becoming upside-down on your own loan - meaning your debt greater than the vehicle may be worth. According to , almost 25% of Americans are upside-down on their own automobile financing, by having an average of $4,442 in negative equity. Being upside-down can really hurt you when you go to get your next vehicle because many individuals sell or trade in vehicles they own and make use of that cash as being a deposit on their own next car. 1. Determine how much money you make per month. If you are on salary this ought to be easy, in case youve got a paycheck that varies from week to week you ought to find a normal. To do this, reference old paystubs. Many companies cut and add hours as his or her payroll deems necessary, so coming up with a dependable number may be hard. If youve got a set minimum level of hours that you work proceed to use that figure, mainly because it guarantees that the finances are designed for the budget you develop. Sydneys husband was prepared to sign a lease your day they shopped for any new car although they had previously not expected for this yet. They still stood a lease on the car we were holding currently driving, and it would not expire for another 8 weeks. They had not discussed nor figured out what course of action to adopt. They had not given any decisions about if you should keep leasing that car, to get it, in order to get a new car. They were just looking, approximately thought Sydney. Unfortunately, Sydneys husband told the saleswoman they COULD get an automobile that day. She said theyd purchase the very last 60 days for the present lease. She managed to get seem like these were finding a ton for the lease of your new car, they will wouldnt need for an additional 8 weeks. 2) Determine the expense from the car, beyond the actual retail price. So the car you are looking at costs $14,000. Okay, this is the car price. Will your insurance increase or down, or stay the same? Is it a hybrid, and may you be likely to pay for premium gas? A new car can change how you pay for things. Determining how much you can afford isnt an exact science. Even if you tend not to keep to the 20% rule exactly, at the minimum you must sit back and determine your expenses. This simple exercise will help you avoid stretching yourself too thin, and help you save from the need to make tough decisions later on should your financial situation changes for the worse.