Determining What Kind of Vehicle You Can Afford
If you’re looking for a new vehicle, your first step should be to figure out how much you’re able to spend on your next ride. Like many car shoppers, you may be dreaming of a brand-new vehicle, equipped with advanced technology and luxurious features. But before you start shopping, take some time to determine how much car you can actually afford. Doing so will save you time and money in the long run and help you manage your expectations to avoid undue disappointment.
Car shoppers should also remember that many vehicles in the last four to five model years likely have many of the same great features available in new vehicles, so you may not sacrifice much in terms of functionality by buying pre-owned.
If you’ll be financing or leasing your vehicle, consider how much you’re able (and willing) to spend each month toward your car payment. Does the car you’ve been eyeing fit your budget and lifestyle or will owning it require you to make financial sacrifices?
At Easterns Automotive, we help car shoppers in the DMV find vehicles they love and can afford. We believe you don’t have to trade quality for affordability, which is why we’re proud to offer a wide selection of quality used cars, trucks and SUVs at competitive prices.
Our knowledgeable sales staff is here to answer any questions you may have and help you find the perfect vehicle for your needs. We also offer financing options to make sure you get the best deal possible.
Trying to Calculate Your Car Budget? Here’s What You Should Consider
Income
Your monthly earnings are one of the most crucial factors in determining how much you can afford to spend on a car.
Generally, you should aim to spend no more than 15 percent of your monthly earnings on a car. For example, if you make $3,000 per month, you should probably budget no more than $450 per month for vehicle expenses, including fuel.
Keep in mind, this is just a guideline and that your individual situation, such as cost of living or existing debts may require you to adjust the amount you can afford to spend.
Existing Debt
The amount you can afford to spend on a vehicle largely depends on how much debt you already have. You can be making a significant amount of money, but if they already have a lot of debt, like student loans, a mortgage, credit card balances or medical bills, you may need to trim your new car budget.
Trading In Your Current Car
Don’t forget about your current vehicle and its value (or your equity in it if you’re still making payments). Trading in your old car for a new one can reduce the cost of the new car and make the purchase more affordable.
Car shoppers should consider all factors before trading in their current vehicle, especially if they have an existing loan. If you’re financing your current vehicle and owe more than what it’s worth, you may be forced to pay the difference out of pocket, or have it applied to your new loan (this will increase your monthly car payment).
Before you go to the dealership, research the value of your car online to have a better idea of how much you can expect to get for it. When you’re at the dealership, be sure to negotiate for the best possible trade-in value.
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