How will you finance a car? First identify a sample of new or used cars you...

How will you finance a car? First identify a sample of new or used cars you would like to own, and for each choice calculate what your down payment, monthly loan payments, and term of payment would be. How much would you need to buy a car and where would that money come from? How much could you afford to pay each month and for how long? How could you modify your budget to accommodate car payments?

Expert Solution

How will you finance a car? First identify a sample of new or used cars you would like to own, and for each choice calculate what your down payment, monthly loan payments, and term of payment would be. How much would you need to buy a car and where would that money come from? How much could you afford to pay each month and for how long? How could you modify your budget to accommodate car payments?

Identification

I will first freeze my wish list and then proceed to commercial evaluation. I will first put down what kind of car I want. This will be governed by following criteria:

Am I going to use to it drive to my office or school or college? Am I going to use it daily or sporadically? This will tell me I need a fuel efficient car.
How long I be owning it? Am i going to change it in say next three years? Answer to these questions will help me figure out if I can do with a used car or i want a new car.
What are the cars available in the market? I will invite quote, go through advertisements and then shortlist the car according to:
1. My criteria
2. Budget

Sources of funds:

Own sources: How much do i have for down payment?
External funding required: How much loan do i require?
1. Terms & conditions
2. Duration of mortgage
3. Interest rate
4. Fixed rate or floating rate mortgage
5. How much monthly payment I can afford?
Go to market and again invite sanction letters from few financiers of auto loan.

Fiscal discipline

Will i be in stress once my monthly mortgage payment starts?
What other mandatory payments I have in my life?
My sources of income? Will my income improve in future?
Do i need to control some of my expenditures to ensure I am not under stress?

jeff jeffy answered 1 year ago

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