Decisions, decisions...

[disdreamin]

We've narrowed our vehicle search down to a sedan or SUV, but the price difference is killing me!  We can get a really nice mid-sized sedan for $22K or so, but the SUV will run more like $28K because we would like 4WD (or at least the simple version of it...not true AWD) if we go that way.  Without going through the whole financing thing beforehand, is it easy to predict whether we would be able to qualify for the lowest-interest (manufacturer) financing?  I'd hate to go through the whole decision making process only to find out we can't qualify for a loan on the vehicle we want.

Some people have said 34% (or was it 36%) of income towards debt payment, but I wasn't sure if this was net or gross income we were talking.   Also, we are paid biweekly and our mortgage is biweekly...should I figure out the monthly cost and income and base it off that?

Lastly, anyone have any opinions about small SUVs?  We're torn between the CR-V and the Rav4, but we're really leary of Toyota  because of the recalls earlier this year, so we're leaning towards the Honda.  The thing that's really tempting about the Rav4 is the 0% loan!  The CR-V is 1.9% or 2.9%, I think.  Not sure if it's worth it to shell out for 4WD - we've never had it and we've been fine but if we go with a lighter vehicle we're wondering if it's worth springing for (we currently have a minivan). 

[Anonymous]

I am under the impression that it is based off of gross pay.  I have heard opinions that conflict with that on these boards, but whenever I ask directly, the thread falls into oblivion without a reply to that question, lol.

You are paid biweekly..  Are your mortgage payments biweekly, or semimonthly?  You need to figure your monthly income and debts.  Just take your gross salary and divide by 12, unless someone comes forward to say that lenders use net pay.  Then if your mortgage payment is biweekly, I guess multiply it by about 2.167 to get a roundabout of the monthly bill.

(CC monthly pmt. + mortgage + loans + new car payment) / (gross monthly income)   should be less than 36%

(new car payment) / (gross monthly income)  should ideally be 10%, but ive heard 14%

Of course you can probably go above these numbers with excellent credit scores.