Steps to Budget for a New Car
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You are looking at a vehicle with an all-leather interior, rearview cameras, and automatic emergency braking, but you're wondering how you can afford it. While you might dream of getting a shiny new vehicle with all of these features and more, you need to make sure that you budget your money effectively so you will be able to purchase it. This means you will need to consider your needs, budget, and other financial priorities. Next, you will need to decide how much you can spend and wish to spend so your transportation needs will be met. In this article, we will let you know how to budget your money so you can afford your dream car and once you are done, be sure to check out our complete new inventory here on our website!
Your Income
You first need to calculate your take-home income, otherwise known as how much you earn after taxes are taken out. Most experts will recommend that you spend 10% to 15% of your income on your transportation costs, including your car payment, insurance, and fuel. Let's say, for example, that your take home is $4,000 a month; then you should spend around 400 to 600 dollars on transportation. To be clear, this range is simply used as a guideline, and depending on your income and expenses; you will have to budget for less. For example, if you live in an area with high housing costs, then you will need to spend less on your car.
Pay your Existing Debt
If you have a lot of debt, such as student loans, medical bills, or credit card balances, then those payments will eat up a large portion of your income. Our advice would be to pay down as much as you can, as these debts will eat up a significant portion of your car buying budget. You may want to contact the places you own money and ask for smaller payments so that your budget is at least balanced before you start looking for a new car. Paying off your debt will also improve your credit score, opening you up to a broader range of vehicles!
Finance
You might want to choose to finance your purchase with a loan. Once you apply for a loan here at Gillman Chrysler Dodge Ram, our team will immediately review your application and credit score. Once your loan has been approved, the interest rate will be set. That rate will be set based on your credit score, and it will help you determine your repayment amount. Your interest rates will affect your monthly payments and the total repayment costs. If you have a lower rate, it will mean you will spend less over the course of your loan.
Car Insurance
Drivers are required to carry liability insurance, and most drivers may choose to opt for collision and comprehensive coverage for some extra protection. Your insurance premium will depend on the type of car you own as well as your age, driving history, location, some selected coverage options, and the number of miles you are going to drive. Keep in mind that the kind of car that you drive will affect the amount of insurance that you pay, and new and more expensive cars will cost a lot to insure, though there are some exceptions to this rule!
Maintenance Cost and Fuel
While you might not be thinking about repairs on a new vehicle right away, every car will need maintenance. Typically, your maintenance will cost you about nine cents per mile. If you drive around 12,000 miles annually, you will expect to pay approximately $1,080 on maintenance annually. Also, if you commute to school or work, then you are going to need to think of the fuel costs. According to the Bureau if Labor Statistics, the average person will spend around $2,094 on gas per year, Though if you enjoy road trips during the summer months, then your actual cost may be higher. To add some money back to your account, get a car with a smaller motor that burns less fuel.
Get a new Dodge or Ram at Gillman Chrysler Dodge Ram
If you have crunched the numbers and are interested in getting yourself a new vehicle, then be sure to head down to Gillman Chrysler Dodge Ram! at our dealership, we have all the latest versions of the Charger or Ram 1500 for your to see and test drive. If you fall in love with any of the cars on our lot, then be sure to check out our finance department, where we will get you the deal of a lifetime and take your trade-in. You can also shop from the comfort of your home by checking out our entire inventory here on our website!
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