Final answer:
The correct answer is C) no debt, emphasizing the importance of managing your credit card purchases by spending only what you can afford to pay back each month to avoid interest charges.
Step-by-step explanation:
When considering how much money to spend on the purchase of a new car, you must consider how your choices affect your spending on other needs. The no debt solution limits your credit card purchases to what you can afford to pay off when your credit card bill arrives each month.
It is crucial to understand how much you can realistically afford to pay on a monthly basis, and then calculate a maximum loan amount that suits your financial situation.
Remember that with any credit card debt, you will incur interest, which will add to the total amount you owe. Always aim to pay your credit card balance in full to avoid interest charges.
When buying a car, whether new or used, and considering an auto-loan, your credit history will be an important factor for loan approval, and it will influence your monthly payments. Therefore, managing your credit effectively by ensuring you do not spend beyond your current means is imperative for your financial health.