Buying a Car Within Your Budget [Guide]

Buying a car is a big expense that can significantly affect your financial situation. To make sure you don’t find yourself in a crisis in a few months, you should always evaluate your budget before going to the dealership.

Create a Budget

If you don’t have a budget, you need one so you can see how much discretionary income you have. If this number is lower than you expected, take a close look at your budget and see if there are unnecessary expenses like daily coffee runs and subscriptions you can cut out. 

Figure Out Your Price Range

The total cost of your car should not exceed 15% of your gross income, which is what you actually take home on your paychecks. If you have a hard time managing your bills, you might want to be more conservative by staying closer to 10%.

Find A Vehicle In Your Price Range

Before you ever consider shopping for a used vehicle, make a firm decision about how much money you are willing to spend.  Set a price and stick to it.

Don’t Buy the First Car You See

It can be hard not to get caught up in the excitement of buying a new car, but doing your research and taking the time to shop around could potentially save you thousands. That savings can go a long way if you’re on a tighter budget.

Find Cheaper Insurance

It might come as a surprise to you but reducing your insurance costs is one of the best ways to save on your vehicle expenses. By finding a more affordable policy, you can reduce that expense and allocate more of your budget to the cost of your new car.

Don’t Let a Dealer Change Your Mind

At the end of the day, the dealer is a salesperson who relies on profits to make money and they can’t do that by selling cars at market value. Like with any sale, add-ons are an easy way to hike up the cost of a car.

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