As rewarding as buying a car can be, it adds a big expense, so it’s important to determine a budget that’s right for you. Since car payments are likely to be the next biggest item in your monthly budget after your mortgage or rent, it’s important that you take time to calculate and determine a budget that works for you. While the vehicle price is a major factor, there’s a little more to it than that.
Here’s a quick rundown of the total expenses to consider when determining your car budget:
Before you visit the dealership, it’s wise to decide what monthly car payments best fit your budget. You can do this by using a car affordability calculator.
Since you’ll need car insurance to drive your newly purchased vehicle off the lot, shopping around for insurance quotes prior to buying your car will help you determine the best rates for your car budget.
You can find out the average fuel cost of a specific make and model by doing a quick search online. Another way is to divide the number of miles you drive each month by your car’s fuel economy rating, available on FuelEconomy.gov. Multiply that number by the price of a gallon of gas in your area.
Maintenance and repairs
According to YourMechanic.com, the average car costs $1,400 to maintain for the first 25,000 miles. The costs increase from there until the 100,000-mile mark, and then less intensely after 100,000 miles. Common maintenance costs include oil changes and tire rotations. The type of engine oil, the age and make of your vehicle and driving habits usually determine when to change engine oil, according to Angie's List.
This part is simple: Just divide your annual motor vehicle registration renewal amount by 12 and there’s your monthly cost!
Determining a car budget will help focus your decision making during the car buying process. If you’ve already calculated a budget but need help getting approved for financing due to having bad credit or no credit, Credit Acceptance can help!
Just fill out this brief form on our website and we’ll connect you with a car dealership in your area that can help you get approved for your next vehicle!