It’s best to work out precisely how much you can afford to spend before you leave to go car shopping. When it comes to buying a car, it’s very important that you set a budget and stick to it. Before you begin your transaction, you should have a maximum price set. If you find a vehicle you like, but the price is over the maximum, you need to know how to walk away.
You can go over your budget the old-fashioned way, with a calculator and your bank and credit card statements, or you can use the income and price range budget calculator on our website.
Remember that a budget is a dollar amount, not a monthly payment. One of the worst things you can do is walk into a dealership and say, “I want to pay $350 dollars per month.” Dealership people are very creative, and they’ll figure out a way to make a car that’s way too expensive cost $350 dollars per month. In the short run it will make you happy, but in the long run it will hurt you most of the time.
If you have a monthly payment in mind, and you don’t know what price it will work out to be, we have a calculator for that: the price range budget calculator, and it will tell you what price range of vehicle you should be looking at.
Here’s a fairly easy system if you’d rather to do the math yourself. Figure out what you can afford to pay per month, and multiply this figure by 36, 48 or 60 (3, 4 or 5-year loans). Add what you can afford for a down payment. Finally, subtract 12-20% of the total for sales tax and finance charges.
Once you set your budget, stick to it. If you find a nice car that meets all your requirements, but it’s $2000 too much, walk away. You’ll find another car.
Here are some questions you should ask yourself to help make the car-buying process a little easier:
- What do you like and dislike about the vehicle you currently own?
- Do you want a lot of passenger space?
- Do you want two doors or four?
- Do you prefer a Standard or an Automatic transmission?
- How much does status mean to you?
- What about fuel economy?
- Are you willing to settle for a well-maintained used car, or is your heart set on buying a new one?
- How much can you afford to spend?
As always, take your time when buying a new or used car. Do your car research, get multiple used car financing quotes, and feel free to contact us with your questions.
