Science & Technology

How to afford a car on finance in 2022

Daniel Martin

Content Writer


Buying a car on finance requires you to answer one simple question. Can you afford the monthly payments? Take an honest look at your monthly income. Aside from all the other bills, can you slot in the extra amount you must pay toward the loan?

If the answer is yes, please read on. We will share some ways to make financing more affordable.


How to afford a car on finance in 2022. Source:

1. Understand the impact of skipping repayments

Let us clarify one fact well in advance. Think about it like a tough-love approach to the decision you are about to make. The impact of not making the repayments will reflect on your credit score. You see, lenders report to the credit bureaus.

Skipping payments is a sign that you do not have control of your finances. The result will be low credit scores that can have significant ramifications in the future. You will find that applying for loans will become very difficult.

Some lenders will not give you the money. Those that do will give you what the industry calls bad credit loans. Such financing carries a heftier interest rate.

But, that’s not the only impact of a bad credit score. Your career could take a hit due to losing out on job opportunities.

Finding accommodation or rental space could be difficult. Some landlords will not lease their property to you. And, running a business can be tough because some suppliers will not avail lines of credit to you.

2. Determine if you really need the financing

Financing frees you up from having to have upfront cash. But, it may not always be the best option. Get clarity on the following before applying for a loan.

  • Determine if you need the financing. If the funds are available, then consider buying cash.
  • Within what period will you be able to pay the loan?
  • Are you comfortable making monthly payments without the possibility of delinquency? If yes, how much will you be able to afford?

Having clarity on the above will make it clearer for you to decide whether to get financing or not.

3. Check out the financing options available

According to a toyota dealership tampa fl, financing is preferable for many people. It provides an opportunity to own a new or pre-owned car. The dealership has entered partnerships with multiple lending institutions.

They work within the client’s budget to secure affordable monthly rates. Even those with bad credit can still get financing.

And, the advantage is quicker, hassle-free approval processes. Once you decide on the dealership, explore what financing options they have.

If you decide not to go through the dealership for financing, shop around. Make the internet your friend because it has tons of valuable resources.

Take time to compare pricing and other terms of the loan. Ask for referrals and seek advice from the experts.

Take note of all the cost implications by asking for a complete breakdown. You don’t want to deal with hidden costs that show up when you start making payments.

4. Determine how much you can afford

Bring out your calculator for this part of the conversation. The rule of thumb is not to exceed 10% of your income on repayments.

Yet, it does not end there. The amount you spend on car expenses should not exceed 20% of your income. Yes, that means insurance, gas, repairs, or any maintenance.

Let’s break it down this way.  Your income is $1000 per month. That means anything above $100 per month in financing is out of your range.

Now, factor in all the other expenses you have to contend with. Can you comfortably say you will make that $100 per month without fail?

And, don’t forget all the other fees that accompany purchasing the vehicle. Some fees and taxes will drive up the cost.

Don’t lose heart, though. There is a way you can go about it. As we shared above, there are steps you can take to reduce the loan amount.

The other option is to take a longer repayment period. It allows you to reduce the repayments to more manageable amounts.

5. Take steps to cut down loan costs

There are things you can do to bring down the cost of the loans. These include:

  • Tighten up your credit, thus ensuring a good credit score. Lenders are more willing to negotiate better interest rates with such.
  • Avoid smaller loans. Yes, this may sound like some bad advice. But, lenders need to make money. And, longer repayment periods on larger loans attract lower interest rates. The smaller the loan, the higher the interest.
  • Refinance assets like your home or car if you have another one. The benefit is lower amounts on the monthly repayments and better interest rates.
  • Consider putting down a large deposit for the car. It allows you to enjoy lower monthly payments.
  • Save money by leasing instead of buying. It saves you from having to bear the unavoidable cost of car depreciation. But, the downside is you will not own the car once the lease period is up.
  • Trim down your expectations by going for a cheaper vehicle. Alternatively, think about a pre-owned car instead of a new car. Most dealerships have both options. So, you should not have any trouble getting something that fits within your budget.
  • Go for the basics. Some dealers will offer add-ons that drive up the cost of the car. These include warranty extensions, paint and tire protection, and so on. They may sound good, but you must pay extra. Look at it this way; those are things that will still be available when you finish the loan.

Final thoughts

Car financing can provide relief if you don’t have cash for upfront purchases. But, they do have a cost implication that you must meet.

Do take the time to do some research before applying. Understand the impact of non-repayments on your credit score.

Also, don’t jump for the first option that presents itself in terms of financing. Determine how much you can afford, shop around and compare pricing.

Some lenders throw in wonderful incentives like discounts. Don’t be shy about taking advantage of such.

Many dealerships avail financing facilities to their customers. If the terms are favorable then it is worth considering. Finally, follow the steps we have shared on how to reduce loan amounts. The rule is only to take what you can afford.

Happy driving!


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