Buying a car isn’t something you should do on a whim. If you intend to use the car a lot and keep it for a long time, then you have to choose wisely. Unfortunately, not everybody has the same flexibility when it comes to their options. If you were thinking about buying a new or used car, here are a few tips on how to find the right car for your budget.
How Much Can I Afford?
Knowing how much you can comfortably afford to spend on the car is the first thing you should assess. A lot of people have different equations to calculate how much you should spend, but as rule, you should never spend more than 15 percent of your monthly take home pay on a vehicle. And if you happen to be leasing, you should reduce that amount to 10 percent. If you’re looking at financing, you have to factor in the interest and costs as well.
These won’t be the only things that you’ll have to worry about, though. You should calculate another 8 percent for insurance, fuel, maintenance and repairs.
Make a Car Budget
While the 15 percent of your income is a ballpark figure of how much you can afford, you won’t get the full picture until your make an actual car budget. You should check how much you make monthly after tax. Then you have to calculate housing costs, energy and amenities, debt you may have and money for food and entertainment.
Once you have all these numbers down, you could use a car affordability calculator to see exactly how much you should spend on a vehicle along with a list of vehicles you should choose from. If by any chance you aren’t satisfied with the range they gave you or the vehicles they chose for you, you could also go for a lease or a used vehicle. Both options will usually allow you to get a better car for less.
Buying a Used Car
Buying a used car can also be a great way to save money on a car without compromising. Most cars lose almost 15% of the value once they leave the lot. Unless you have the means for it, buying a brand new car is just not a great option. You could buy the same exact vehicle, but with a little more mileage for a fraction of the price after 2 or 3 years.
This is especially great with models that barely change; some models will go 3 or 4 years without changing their silhouette, so you’ll barely notice the difference. Not only that, but these vehicles will often still be under warranty, so you won’t have to worry about reliability issues. The only advantage a new vehicle would have is that you’ll be able to get a lot more if you apply for car title loans. Besides that, used vehicles are usually a great deal if you have a limited budget.
Buying a great vehicle on a budget is totally possible when you know how to go about it. If you manage to follow some of the tips in this article, you should be able to find the best vehicle for you in no time.