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What Price Can I Afford?

The affordability of your vehicle has a lot to do with your other existing monthly expenses. A general rule of thumb is that your car payment should not represent more than 20% of your income. This does not include insurance, so the overall number would be slightly higher.

Part of the problem in determining what vehicle you can afford is not knowing what the final price of a vehicle will be when you get into a lease. There are many factors to consider, but a good baseline is to use $125 per month in payment for every $10,000 in MSRP cost. Again, these will vary greatly, so this is just a real general rule.

For a quick calculation on actual lease rates, go to the internet and perform a search for real-time rate calculator. Most calculators use the actual ALG values that the dealers use across many popular lenders. Your payment ranges will vary based on the criteria that you input, especially your selling price and term. Affordability should also consider the cost of insurance as well. (See the section entitled “Shopping for your Insurance” for more information about researching insurance companies.)

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