Unless you live in your car, there is no reason to pay the same amount you’d pay for rent for a car. If you’re not careful, it’s very easy to become car poor. What does this mean? Well, it means you have a job and can pay your bills, but you have no extra money because it all goes towards your car. When you’re in the market for a new car, here are a few budget tips for buying one that you can afford.
Know what you can afford
That’s right! Sit down and look at your budget, know what you can afford. While you may be able to afford the car payment, can you afford the car repairs? Just because you can spend the money on a brand-new vehicle, it may not be the smartest thing for you to do.
Use a payment calculator
Because you will most likely have a car payment, when you buy the vehicle you’re looking at, you may want to use a payment calculator. A payment calculator can help you determine how expensive something will be when you buy it. For example, you put in how much the car is that you’re buying, how many months the car loan is for, and the percentage rate.
Stick to what you can afford
Once you test drive a vehicle, it’s so tempting to just go ahead and buy it, whether you can afford it. It’s important to just stick to what you can afford! Being car poor is not worth it. If you’re paying for a car, but can’t afford to buy groceries, something is wrong. Making sure the car payment or even paying in cash fits in your overall budget is a very smart thing to do.
Consider the extras of owning a car
Whether you have a car payment or bought a vehicle outright, there are many extra expenses of owning a vehicle. Car payments are one thing, but consider insurance, the cost of gas, and even the cost of regular maintenance.
With all this in mind, being car poor is no fun. Make sure you know how much you can afford, when buying a car. Make sure you leave enough in your budget for an emergency fund to. Money can get tight and it’s nice to know that there is money put back for emergencies. Interested in buying a car that’s within your budget? Make sure you check out this payment calculator to get started.
Great tips to have. Just bought a car and did reallywell with it
Had to weigh in on this as my husband has been in the car business for almost 40 years. We try to buy a car that is 1-2 years old to save money. He worked in the finance office and saw people WAY over extend themselves to buy cars that were equal to their annual income! Why do that. Buy an older or cheaper car and put that money to better use.
We have cars that suit our family’s needs. They’re expensive, but do add to our quality of life. Hoping to keep them for a long time!
Great tips. My daughter will be looking at buying a car soon. I will share this with her. Thank you!
People always forget those extra costs. Wouldn’t it be easy if all you had to buy was the car itself? Haha I wish!
Thanks for the tips! I may be trading my car in soon. Very helpful!