3. How much car can I afford? How Much Car Can I Afford? Before buying a car, it is critical that you determine both the complete price of the vehicle and what you can afford to spend. This information is essential in deciding whether to pay cash or finance the vehicle with a loan. The difference between these two methods of payment, however, is the difference between paying the car's full price versus making a much smaller down payment and fitting the monthly payments into your budget. There are two schools of thought about how much car you can afford. Financial experts recommend that the amount of your car payment should not exceed 20% of your net monthly income. Others suggest that if you can accommodate the payment in your budget, then it's acceptable--although you shouldn't obligate yourself to eating rice cakes for the next four years. Cajas a 38-year-old woman whose current gross monthly income is $3,000. Given an average personal tax rate of 30% for her federal, state, and local taxes, Caja's net monthly income is .If she follows the advice of financial experts, what is the maximum amount that she should spend to purchase a new vehicle? (Note: Round your answers to the nearest whole dollar.) O $600 O $1,680 O $420 An alternative to the 20% rule is to evaluate your budget, determine a monthly payment that you can reasonably afford, and then incorporate that information with the maturity and interest rate of a possible loan to determine the value of the potential loan. When this value is added to a saved amount of a down payment, you know the total amount that you can reasonably afford to spend on a new car To review this process, consider the following caser Caja's Car-Buying Decisions Caja, who lives in Houston, is trying to decide between the following car models: ITU DESons An alternative to the 20% rule is to evaluate your budget. decembe a monthly payment that you can reasonably afford, and then incorporate the Information with the maturity and inte strate of a possible loan to determine the value of the potential loan. When this value is added to save amount of a down payment, you know the total amount that you can reasonably afford to spend on a new To review this process, consider the following case: Capa's Car-Buying Decisions Caja, who lives in Houston, trying to decide between the following car models Brand and Model Cost 12.295 26.305 Ford F 150 Pickup She's currently accumulated a down payment of $3,000 and she has determined that she can afford macimum payments of $475 per month. Her Initis research on the current cost of auto loans has found that her lowest cost loan would be made by a bank and would require an interest rate of 64 for four years. and the most expensive car that she can Given Information, the maximum amount that caja can afford to pay for her new car afford to purchase, without stretching her budget.is The Ford F-150 Pickup The Chevrolet Camare ko. The Kia Rio Caja should buy car at this time due to her limited budget Patriot