Spending on a new car is both exciting and joyous unless you make an unreasonable purchase. To make sure that your joy lasts long, you should first make sure that you are ready for the long term expenses which come along with buying a car and do the spending in budget.
Many people make wrong purchases and end up making the car a burden on themselves.
Here are a few tips for you by which you can determine how much you can/should spend on your car –
1 . Review your income and expenses
Many people make the mistake of choosing the car they want to buy first and then planning the budget to have it. You should take in note of your income and expenses you make in a month and then find out the difference to determine how much money is left in hand with you.
While taking in note of the expenses make sure you include each and every spending in your expenses list.
2. Make an estimate of the monthly payment you would have to pay.
As you find out how much money is left with you, put that figure and your ideal loan terms in a loan calculator so that you can get an idea of the cost of vehicle which is within your means.
Don’t get tempted to stretch the loan period for buying an expensive car because according to Edmunds, the current average loan period is 72 months but should not be extended more than 60 months because the more you stretch the loan period, the more interest you pay for it.
3. Take in note of the maintenance cost you would have to bear
According to Jalopnik, you should add into your budget the costs of – car ownership, insurance, gas, maintenance and unexpected repairs.
Consumer reports say that you should also include expenditures like vacation savings, emergency spending, retirement savings and any other financial goal if present into your budget.
4. Differentiate between your needs and wants
Not all features of a car are prime requirements for a buyer. Some are essential which are actually needed but some are wants which a buyer may desire to get but will be okay if he did not get those.
The best thing to do according to U.S News and World Report is to pinpoint where the needs and wants intersect.
An assessment to how you will use the vehicle will give you the idea for what you want in your vehicle to figure out those and you are good to go.
5. Narrow your options
As you figure out what your budget is and what are the features you need ,search for only those cars which fit your criteria be it online or from any dealership. As you narrow your options it would be an easy process to inspect only few number of cars, taking them for test drive and choosing the winner which best suits you .
