Buying a brand new car is not cheap. They typically cost thousands of dollars, and you’re more than likely not going to be able to cover the entire cost of your new vehicle right away, meaning you’ll have to do some sort of payment plan. This means you’ll likely have to budget in order to make sure you can afford not only a down payment but each payment that follows that. Budgeting for something so expensive can be difficult, so here are a few tips to help you budget for a new car.
Set A Price Limit
The first thing you’ll want to think about when budgeting for a new car is what your price limit will be. Cars vary in price and depending on what you want, they can get to rather high price points. When looking at your finances, be sure to think about how much you’re actually willing to pay so you can begin budgeting. A good rule of thumb is to avoid paying monthly payments that are more than 15% than your gross income. While this may end up eliminating your more desired car options, there are likely plenty of great options available more in your price range.
Think About Additional Costs
One of the unfortunate parts of buying a car is all of the additional costs that come with it. You’ll want to do your research and consider extra costs such as sales tax, registration and title fees, car insurance, and gas. All of these fees will add up over time, so leaving them out of your budget for a new car can end up costing you in the end. Registration and title fees can be rather significant but you usually only have to pay the title fee once while the registration only has to be renewed on a yearly or bi-yearly basis, depending on where you live. Other fees such as car insurance and gas are much more frequent payments, so it’s important you can afford these extra costs.
Don’t Forget Repairs!
Finally, it’s important to think about any potential future repairs. Since you’re buying a brand new car you hopefully won’t have to worry too much about anything breaking for a while, but it’s always better to be safe than sorry. Getting your car repaired can be expensive, and when you go to get your car inspected there’s always a chance your mechanic will discover that several expensive things need to be repaired in order to pass. This can take a chunk out of your wallet, so always remember to put aside extra money for potential repairs.