Second only to buying a house, the cars that you purchase will typically be the most significant financial transactions that you make in your whole life. Consequently, it makes sense that you take a significant amount of time and effort to plan out your automotive purchases.
One of the first steps in making this plan is to come up with a car budget. Too often, consumers make the mistake of not properly budgeting for their car purchase, and end up having to sell or return a vehicle that they purchased that was well out of their financial limits.
In this article, we’ll help you avoid that unfortunate scenario by helping you answer the question, “what car payments can I afford?”
Consider All the Expenses
The first thing that you need to consider when you are purchasing your car is that there are going to be several different expenses related to your car that you need to budget for.
First and foremost will be the actual monthly payment on the car. The monthly payment will depend on the interest rate you secure, the term of the car loan, and the total value of the vehicle. This is the most significant expense typically.
But beyond the monthly loan payment are several other expenses that many folks fail to consider. For starters, there is insurance, yearly emissions, and registration-related fees.
In addition to that, you’ll also need to make space for maintenance costs. Not only will you pay to put gas in your car, but oil changes and scheduled services will also be significant costs. And if you don’t have a warranty, then you can expect something to break every now and then that will produce a significant shop bill if it’s not something you can fix on your own.
Lump estimates of all of these expenses together when considering what car you can afford. Make sure your budget can stretch to fit the total monthly sum.
Negotiate a Good Deal
Secondly, it will also be important that you negotiate a good deal for your loan. There are several factors that impact this.
Your interest rate is determined by the financial institution that you choose to get a loan from. The higher your credit score and lower your total debt, the lower the interest rate that you’ll be expected to pay. Know more about auto equity loans.
The other part is also negotiating with the dealership for the actual value of the car. Be sure to take full advantage of any tax exemptions, rebates, and such that will come your way. In addition, shop around at a few different places to make sure that you are getting the best possible quote.
Defining Your Car Budget
There you have it. Equipped with this guide, you should now be far more prepared to budget for your automotive purchase.
For more car budget and financial articles, be sure to take some time to check out the rest of the articles available to read on the website before you leave!