Did you know? Cars wouldn’t last more than a few years on the road without the appropriate maintenance. Of course, buying the car is what comes first and that’s what we’ll be discussing in this article.
Buying a new vehicle is exciting and for good reason. It’s always fun to get something new, and cars are especially interesting since they impact our daily lives in so many ways. And as one of the three most valuable commodities transported by U.S. freight companies, alongside electronics and machinery, vehicles tend to carry hefty price tags with them, especially when they’re brand new.
Unfortunately, that hefty price tag can be a problem for many car shoppers. It’s not enough just to find a car you can afford — you also have to resist the ever-present temptation to overspend. To find out how to stick to your budget when buying a car, keep reading.
Define Your Budget First
Obviously before you can stick to a budget, you have to make one. With unemployment rates declining across the nation, down by 3.7% in September, more people are buying cars. Besides being the result of an improving economy, more workers means more people needing cars. But sadly, just because you need a vehicle for work doesn’t mean you can justify any car at any price.
When you decide how much car you can afford, it’s important to take multiple factors into consideration. First of all, there’s the price of the car itself. It can be tempting to focus entirely on the monthly cost of your loan or lease, but that’s usually a bad idea, as a very expensive car can be had for a relatively manageable monthly price. Instead, figure out what total price is actually reasonable for you with your income, expenses, and current liabilities. That includes taxes and fees involved in buying a car.
Next, take into consideration what you can afford for insurance and auto maintenance. This will be different for various vehicles, so knowing in advance what you can afford will help you choose the right one.
Here’s a good rule of thumb for setting your budget: you should be able to put at least 20% down on the total purchase and finance the rest for no more than four years. Then, your monthly car-related expenses should be no more than 10% of your monthly gross income (that includes your car payment, insurance, and maintenance). With about 87% of families already in debt, it’s important to manage how much more debt you’ll be adding with your car financing plan before you sign off on it.
Define Exactly What You Need and Want
There are two things you must have crystal-clear in your mind before you begin shopping for an expensive item like a car: your available budget and the exact sort of item you’re looking for. In this case, you need to know exactly what kind of car you want to buy before you think of setting foot in a dealership.
A classic strategy to use for defining what you need and want is to take two sheets of paper, and write on one of them all the things you absolutely must have in your new car. If you live in a cold climate with lots of snow and ice, you may need certain features for safe winter driving. If you’re forced to do a lot of driving for your job, you may need a sturdier or newer car than if you only drive a couple of miles to work every day.
On the other piece of paper, write down all the things you’d like to have in a car but are negotiable. This way you’ll have taken all the things you want into consideration, but also acknowledged that they aren’t what’s really important. If you find a car that features everything you need and want at a price you can afford, then great! And if not, it’s okay, as long as you’re within budget and you’ve found what you have to have.
If you aren’t completely clear on this at the start, a pushy salesman could easily make you think you need more than you really do. You might even get hypnotized by a certain car’s flashy features without considering that they aren’t important for you. Knowledge is power and, in this case, knowing what you want and need can give you the power to stay within budget.
Look Online Before Visiting a Dealer
When you’re looking for a new car with a budget, going to the dealership should actually be one of the last things you do. That’s because the dealer and salespeople are the most likely to try and force you to consider options above your budget, so the more research you’ve done in advance the safer you are from overspending.
To start your car search, try checking out listings on Craigslist or eBay. Only around 33% of retailers have the mobile infrastructure necessary to display their available inventory online, but many local dealerships have frequently-updated websites where they list the cars they have for sale. This is a great way to find out what your options are locally before actually visiting a dealership.
As you find cars that seem to fit your budget and needs, write them down. You will use this list to compare insurance rates and probable maintenance costs.
Check Insurance and Maintenance Costs
With your new list of possible cars to purchase, you should research the safety and reliability ratings of each. Find out what their gas mileage is and how frequently they break down or need maintenance. The more expensive a car will be to own, the less helpful it is to find it for a great price.
You should also talk to a few insurance providers to find out what insurance would cost for each car.
By now, you’ve done more research than most people even think about when buying a new car. You’re finally ready to strut into a dealership and get the right car at a good deal, all while staying within your budget.