You are ready to invest in a car of your own, and it’s decision time. Would it be the luxury Mercedes C63 AMG of your dreams or the more modest Daewoo Matiz? Brand new or used? The latest model or of the previous years? Are you paying by cash or making loan payments? It ultimately boils down to the single most crucial determinant – your budget. All else being equal, what car can you comfortably afford?
When financing a vehicle in Ghana, you have the option of paying cash outright, applying for an auto loan from a bank or obtaining payment plans from dealerships. Purchasing a car is a big decision with financial costs beyond the initial purchase. Beyond the initial cost of the car are other tax and fee payments to be made. In this article, we will share key steps to determine how much a car you can easily afford.
When deciding what car you can afford, assess your monthly salary with respect to your monthly expenses. Determine your disposable income after paying for current household and personal debt like rent, utility bills, health care, taxes, and other expenses.
According to experts, if you intend on paying cash immediately for the vehicle, ensure that the cost of your car does not exceed 35% of your yearly income. On the other hand, monthly car payments are limited to 10% – 15% of your monthly disposable income.
By not exceeding the 15% mark, you are more likely able to cover ongoing expenses while the car is in use, at an additional 5%. Once you have developed a fair comparison of your net income to monthly expenses, you can establish a realistic budget for your car.
Do you qualify for an auto loan? Do the research and determine the requirements to prepare you for financial assistance.
In Ghana, there are two main ways of owning a car and paying in instalments. These include getting an auto loan from a bank or monthly payment deals from car dealers. Note that some of these establishments will assess your ability to pay back the loan. Banks usually use this to determine how much loan to approve for you and the interest rates attached to this loan.
After sufficient due diligence on what you can afford to spend and your payment options, you can now begin to search for vehicles that are feasible within your budget. The car market in Ghana is now a bottomless source of possibilities. You have the liberty of comparing makes and models of cars that best fit your financial profile.
The ball is now in your court. What car you can afford will always depend on your financial status. Take into account all necessary fees and taxes included in the cost of a vehicle and understand the payment options available to you. To ensure you make the best financial decisions, use this Car Affordability Calculator to help you identify your purchasing power.
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