How can you decide if you can afford another car?

Answer 1

If you can pay cash, then you can afford it. That answer is a bit lacking. If you have cash, you can afford to pay cash. Look at your current income, and expenses. If you are running a surplus after all expenses fixed (mortgage or rent, utilities etc) are paid, and your variable expenses are covered (groceries, entertainment etc) then you may be able to afford another car. If you are looking at new, there are some very attractive rates. There is no problem going into a low interest loan to pay for a car. In fact to pay cash is foolish if you can get a 0-3.9% loan. The money that you pay for the car is cheaper in the long run than if you pay cash. I would suggest making a down payment or trading in your old car (sell it outright and use the money for a down payment). Comon Clay, you can do better! You are right, I can do better. I think we as Americans have been brainwashed to think that we need to finance everything. A home is one thing that it is almost always necessary to finance. A car is quite another thing. After years of financing cars, I finally realized that I was stupid. There is no reason to borrow money to buy a car, unless you can get a 0% loan. Purchase what you can pay cash for and save until you can pay cash for something better. We all think we must drive a nice car from day one. Why? Drive a beater and save your money. The feeling of walking into a dealership and paying cash for a car is wonderful. I have paid cash for the last three I have bought. Also buying a new car is a terrible idea. Purchase a 1-3 year old car with a Dealer Certified warranty. You save lots of money and get a way better warranty than on a new car. The last car I bought was a 2004 Certified Honda Accord. It had 13,000 miles and came with a 7 year 80,000 mile warranty. Way better than the 3/36 of a new Accord. I also saved around $3,500 versus buying it new. Let someone else loose all that money buying new. Put you money in a savings account and drive that beater until you can pay cash. Financing a car which depreciates at an alarming rate and is worth less every month is a bad idea. Don't listen to the people who are brainwashed.