Budgeting for a New Car

There's two ways of thinking about affordability. Some people spend a little extra and get a new car to avoid maintenance costs, and others get used vehicles which will save on upfront costs. It's clear that "affordability" isn't as clear cut as one might initially think, and a pay now or pay later strategy might not be nuanced enough to provide a complete answer on affordability.

What is Your Credit Score

Whether you're buying new or used, from a financial perspective a vehicles affordability is based on a few factors. First, what is your credit score? Your credit score is a measure of financial health that can determine the amount of a potential car loan. Credit score range from 300 to 850, and poor credit is generally considered to be below 500. Don't worry, even with bad credit you can get financed.

How Down Payments Affect Affordability

How much money do you have for a down payment? Paying more money up front will help decrease the overall size of the loan you need to finance your vehicle. The more you have saved up to use as a down payment, the less you need to borrow.

Long Term or Short Term

How quickly do you want to pay off your vehicle, and what interest rate do you qualify for? In some cases, car loans can be extended for terms up to eight years, but a shorter loan is far more common. A longer payment term generally means lower monthly payments, and the rate you qualify for will determine how much interest you pay on the principle of the loan.

The 20% Rule

Whatever the financial specifics end up being, a general rule of thumb is that your monthly automotive expenses shouldn't exceed 20% of your income. That includes what you need to pay for gas, oil changes, insurance and maintenance as well.

Managing Car Payments

Your monthly payment on a loan is generally dependent on both your down payment amount, and the term length of your car loan. Remember that most likely, you'll pay more than the vehicles resale value will be worth after the loan is paid back, because vehicles depreciate in value over time.

Take some time to consider these factors, and do some calculations to determine answers that make sense to you. If you're unsure about anything, let us know and we'll be happy to help you out! You can use a loan calculator as well.

Research Vehicles and Get in Touch

Once you know what you can afford, be sure to research your car online, and make sure you are comfortable with everything it has to offer. Be sure to enjoy the process of researching, test driving, financing, and ultimately owning and enjoying the car you can afford! With a huge inventory of quality new and used vehicles available through our select dealership partners, better rates on vehicle financing and auto loans, and a strong commitment to great customer service at every step, we can get you in an affordable vehicle today.