Ask Karen Gibbs

Veteran business correspondent Karen Gibbs answers your personal money questions and addresses current topics that affect YOUR finances on a daily basis. Karen is the financial expert in your corner--no question is too basic or too small. Karen boils down the issues simply: here's what you need to know, and here's what you need to do. Send your money questions to and post your comments below.



Buying a Car 101

Karen Gibbs

Hi Karen, I’m ready to buy a car but want to know how to select a dealership.  Also, what are your thoughts on dealer financing?
- Paul, Owings Mills

Blue CarThanks for your timely questions Paul.  The new car season is upon us and dealers are looking to make room for the new 2017 models and move older vehicles off their lots.

Buying a car is a major purchase.  It is a “durable good” that can be expected to last three years or more.  Along with the purchase price, you must factor in title, taxes and registration costs, insurance premiums as well as maintenance and upkeep.

The first step is to identify how much you have to spend and what type of vehicle you want to drive.  Many dealers will ask you how much you can afford to pay every month.  I prefer to consider the total cost of the car instead of monthly payments.  Factor in a 20% down payment, a four year financing term with monthly payments not more than 10% of your household income.  Crunch ...

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