How much car can you comfortably afford?

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:

• Do you have a down payment or trade?
• How reliable is the car? Have you searched for information and reviews of the model you want to buy?
• How much will your insurance cost?
• What are the annual registration fees?
• Will your fuel costs increase or decrease?

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. 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. You don’t need to find a vehicle before you apply for an auto loan pre-approval. To get started, apply for the maximum amount you may need to borrow. After you find a vehicle and finalize the deal, we’ll finish up the loan using the dealer’s purchase sheet which will show the final sales price including tax and tags.

 

Auto Loan Pre-Approvals Offer:

• Time to shop—an auto loan pre-approval is good for 30 days.
• The power to negotiate a better price—you are pre-approved and ready to buy.
• The opportunity to save time—no need to sit with a dealer’s finance manager.
• Low rates and flexible terms—up to 84 months for new and 72 months for used vehicles.
• Mechanical Repair Coverage available—protect your budget from major repair bills.
• Guaranteed Asset Protection (GAP) is available—if your vehicle is stolen or totaled in an accident, GAP will cancel the difference between the pri­mary insurance settlement and what you may still owe on your auto loan.

Speak with a financial counselor. We’ve partnered with GreenPath 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 or schedule a call. It’s free, no-pressure, and 100% confidential.