Budget Considerations When Buying A Car
If you find yourself in the market for a new vehicle, it’s important to ask yourself how the monthly payment will fit into your budget. So, before you head off to the dealership, we thought we would share a few budgeting tips for you to consider as you shop for your next vehicle.
How Much Car Can You Afford?
If this seems obvious, you’d probably be surprised how far down ‘affordability’ lands on people’s priority lists. After all, shopping for a new car is exciting! But before the thrill of a test drive and that ‘new car smell’ influence an impulse purchase, we highly recommend taking the time to evaluate how much you can truly afford. As you think about your budget, consider all the costs of purchasing a car. Down payments, dealership fees, taxes & registration fees are just a few additional costs that will impact what you can afford and should be factored into your car buying budget.
Costs Beyond Your Loan
While it’s appropriate to focus on getting the best terms for your loan, there are other expenses beyond your interest rate and monthly loan payment that are worthy of consideration. Interested in a larger vehicle model like a truck or a family-sized SUV? You’ll want to consider how fuel costs will fit into your monthly expenses. Got your eye on a sleek new luxury sedan? Research the maintenance cost of that specific make and model. The cost and expected frequency of oil changes and other routine repairs might surprise you.
The Age-Old Question: New or Used?
As you consider how a new car might fit into your budget, you’ll have to ask yourself the time-honored question: should I buy new or used? We’ve all heard the statistics about a new car losing a large chunk of its value as soon as you drive off the lot, but dealer perks like free oil changes & additional warranties, plus a lower cost to insure, and the latest technology when it comes to fuel efficiency can significantly close the gap when it comes to total cost of ownership. Set on capturing the savings of buying used? Be honest with yourself about how long you plan to keep this vehicle and how the terms of your loan match up with that plan. This will help you avoid the “upside-down” situation where your vehicle is worth less than what you owe when you might find yourself in the market again. If you’re considering buying used and keeping it long-term, be sure to do some research on average costs for common (and uncommon) repairs.
When it comes to purchasing a new car, it may seem as easy as fitting a car payment into your monthly expenses. We hope we’ve shown that it’s important to take the time to evaluate all of the costs of a vehicle purchase and fitting a new car into your budget in such a way that you can keep your financial goal on track. When you’re ready to move forward with finding a new ride, head over to our Car Buying page, where tools like TrueCar, CarFax, and our Check-In-Hand loans make the vehicle purchasing process quick, easy, and convenient.
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