Easterns Blog

Buying a car goes far beyond paying a simple sticker price. There’s a multitude of expenses to consider, from the costs that bolster the upfront price to the expenses that persist throughout vehicle ownership. Before making the decision to invest in a new car, it’s important to craft a strict budget plan and financing strategy to ensure you won’t endure financial stress and strain from owning a car.

Initial Costs

In addition to the price written down on the windshield, you’ll also have to factor into your upfront payment:

• Registration fees
• Title fees
• Documentation fees
• Down payment
• Insurance costs
• Sales tax, which is approximately six percent in D.C., Virginia and Maryland

Recurring Costs

Financing

While financing can help you save overall, it’s still an expense that includes monthly payments and interest. You should take into account your payment plan when planning your monthly budget. How much you spend each month will depend on your loan terms.

Shorter terms (three to four years) mean higher monthly payments but less interest paid overall. Longer terms (five to seven years) have lower monthly payments but higher total interest. Which will suit you better will depend on your goal – if you have a tight monthly budget, you may benefit from a longer loan. If you’re buying a car as a way to improve your credit score and you can afford a slightly higher monthly payment, a shorter loan term may be preferable.

Insurance

You can’t legally own a car in D.C., Virginia or Maryland without paying insurance. Moreover, how much you’ll pay on your premiums will be influenced by your choice of vehicle – everything from its make, model and year to whether it’s new or pre-owned will factor into your total. Get a quote from an insurance provider before buying a car to see how costly your premium will be.

Fuel

Your biggest recurring cost will be gas. The gas mileage of your vehicle and what fuel it requires (regular, premium or recharging rates if it’s an electric car) will play a major role in how much you pay for driving.

Roadside Assistance Membership

While not substantial, the cost of a roadside assistance membership – if it’s not included with your insurance policy or the initial car price – will add to your monthly total. While not required, many drivers feel better with guaranteed roadside assistance if something goes wrong.

Routine Maintenance

You also need to account for regular maintenance, including oil changes, tire rotations and brake inspections, which will get more expensive the older the car becomes.

Parking

Especially if you live in a city, chances are you’ll be spending a significant amount a month paying for parking.

Emergency Costs

Not all costs can be predicted. Make sure you still have some room left over in your budget for the unexpected. From sudden repairs and replacements due to wear and tear or accidents to your car’s value depreciating with time, there’s always money to be lost.

How to Budget for a New Car

Do the math before you walk into a dealership. The total cost of ownership and maintenance should not exceed 15 to 20 percent of your monthly income. The general rule of thumb is 20/4/10: a down payment that’s 20 percent of the car’s price, a loan term of 4 years if you’re financing and a monthly car payment of no more than 10 percent of your gross monthly income.

While buying a new car won’t be ideal for budget-conscious car shoppers, buying the cheapest car will also pose problems and may cost you more in the long run. A well-maintained, thoroughly inspected pre-owned car likely won’t require expensive repairs in the first few years.

Easterns Automotive offers a vast inventory of pre-owned vehicles that have been thoroughly inspected and tested to ensure they are a high-quality, long-lasting investment. You can purchase a used car for far less than a new car and enjoy flexible financing plans. Our financing experts have a reputation for putting the needs of car buyers first and can work with everyone regardless of their credit score.

Discover Exceptional Used Cars, Trucks and SUVs for Sale in Baltimore and Washington D.C.

Call 888-650-4775 or visit one of our dealerships today to learn more about our certified pre-owned models and our personalized financing options.