Whether you are buying your first car
or want to replace an older vehicle, it is important to stay within a
certain budget. It can be tempting to get in over your head, which
could ultimately mean falling behind on your car payments or even
having the vehicle repossessed. Consider how to budget for a used caryou can depend on and afford.
Review Your Monthly Budget
Be aware of the necessary expenses that
will come before making your monthly car payment. For example, you
need to pay your rent or mortgage to have a house to live in. Other
essential expenses might include utilities and health insurance.
Tally up these costs versus your monthly salary to determine what is
left. Never depend on income such as overtime or side jobs, as this
is sporadic and should never be factored into your steady income. Now
you can determine how much you can actually afford to pay for a car
each month. Making a larger down payment can help to lower the amount
of your monthly car payments. Another possibility is trading in your
current car or selling it privately to get the most for the vehicle.
Be Aware of Related Expenses
Besides making the monthly car payment,
there are other expenses associated with driving a vehicle. You need
to have a valid drivers license and pay the state fees to maintain
it. The car also needs to be registered, which is another expense.
Regular maintenance needs to be done on the vehicle, such as oil
changes and tune-ups. Plus, you need to pay for basics such as gas
and oil to keep the car moving forward. In most states, a minimum
auto insurance policy is mandatory and most lenders require you to
have a certain amount of car insurance.
Consider an Extended Warranty
If the idea of paying hundreds of
dollars on repairs such as the transmission or engine make you feel
anxious, consider investing in an extended warranty on the car. For a
monthly fee, certain repairs will be fully or partially covered.
Weigh the cost of the warranty versus your savings and the potential
cost of repairs to determine if it is a wise choice. Review the
warranty carefully to find exclusions that could make it less than
worthy of your monthly investment.
Negotiate the Terms of the Sale
Always try to negotiate the terms of
the sale. Verify the value of the vehicle at sites such as Edmunds or
Kelley Blue Book. Have your mechanic inspect the car before you buy
it. Get the best possible terms on financing by applying at your bank
as well as through the dealership. More options are always better so
you can make an educated final decision.
Shop Around for Insurance
Car insurance is likely to be a
necessary expense associated with buying a used car. Keep in mind the
type of car you buy can have an impact on the price of insurance. For
example, a new sports car costs more to insure than an older sedan
because the cost of insurance is based on risk. Shop around to ensure
you get the most comprehensive coverage at the lowest price.
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