Part of the process of learning how to budget for a car is understanding what you can actually afford, compared to what you might really love to have. Navigating the car buying experience will go much smoother, once you clearly know what fits into your overall financial plan.
Keep Total Costs in Mind
Beyond the price in the window, here are some other considerations as you create your car expense budget:
Keep total transportation expenses below 25% of your take-home (net) pay.
Set your budget and stick to it. When you start looking, resist the temptation to go above what you know you can afford.
When all of the monthly costs are added up, you will get a better idea of what kind of car you can comfortably afford. Also, remember an offer of a low monthly payment doesn’t always mean a better deal for your bottom line. An offer of a lower payment could be because of a longer-term loan or higher interest rates. This can mean you may pay much more for the car than you expected.
Understand Your Total Financial Picture
Budgeting for a car is a big decision. As you begin this process, it’s a great time to also look at your full financial picture. Keeping track of your income and expenses makes it easier to manage a major purchase like a car, while reducing the chance of getting off track financially. Use this to get a better picture of where you are and where every dollar is being allocated.
Be patient as you make a large spending decision like purchasing a car. Take the time you need to be confident about your choice.
Ready to rev up your car budget?
Use our financial calculators to find out how much your payments will be and plan your savings.
Visit our website to view rates and apply for an auto loan pre-approval.
Speak with a financial counselor. We’ve partnered with trusted national non-profit GreenPath Financial Wellness to provide individualized counseling and guidance. A financial counselor can review your budget and make sure you are ready to purchase your dream car or truck. Call today, 877-337-3399. It’s free, no-pressure, and 100% confidential.