The Personal Finance Podcast How Much Car Can You Really Afford (By Income!)
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Feb 12, 2025 Discover how to determine the true affordability of a car based on your income. Unpack the importance of gap insurance and learn to navigate car buying finances with key budgeting insights. Explore how salary ranges influence what you can responsibly spend, and get practical advice on opting for reliable used cars. A free spreadsheet is provided to help you make smarter purchasing decisions, ensuring you keep debt at bay while enhancing your financial stability.
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Cash is King
- Prioritize paying cash for cars to avoid interest and depreciation.
- Allocate savings specifically for car purchases.
20% Down Payment
- Put down 20% to avoid being underwater on your car loan if it's totaled.
- This protects you from depreciation and builds equity.
Four-Year Loan Max
- Limit car loans to a maximum of four years, ideally three or less.
- Minimize the duration of car payments to build wealth faster.