How To Budget For Your Next Car

When I was car shopping for the first time, it was pretty exhilarating. There were tons of different options, features and perks for me to choose from, both physical and financial. Heated seats, touch-screen navigation, Bluetooth connections… You name it. I quickly realized that those are not as important as having extra cash in my pocket and establishing or reestablishing my credit.

With all of that being said, you have to know your realistic budget before getting jazzed-up about features you may not be able to have. It can be tricky to budget, so we outlined a few of the more important tips to help.

How To Budget For Your Next Car

Establish an Amount You Can Afford Per Month

No matter what you’re budgeting for, this has got to be your first step. There are many online resources that I use daily to help budget monthly income and spending, such as Mint.com. It can help break down an overall budget, which can then be applied to a monthly car bill.

The break down will go something like this: figure out your monthly take-home pay, monthly expenses, and all your other estimated spending. Then, you’ll have a good idea of what you can allocate per month and total.

Understand The Cost

I sometime compare getting a car to getting a dog. Growing up, I always had one or two dogs at a time. It was never a light decision getting a dog, not only because of the responsibility involved but also the estimated costs. The same goes for getting a car; there is money down the road you’ll have to use to keep it up and running.

A few expenses you should consider factoring in to your budgeting:

  • Insurance
    • Insurance rates vary a lot by numerous factors. However, according to Value Penguin, most states average about $1,200-$1,500 per year or $100-150 per month.
  • Regular Maintenance
    • It’s impossible to give an exact number on what you can expect to pay for maintenance and repairs on a car. However, you do need to take into account simple things such as oil changes every 3,000 to 6,000 miles, wiper blades (not cheap these days!), wheel alignments, etc. On top of these, there will be more costly/emergency expenses. It’d be a good idea to set aside about 5 percent of the car’s cost in case you desperately need it.
  • Gas
    • You would not believe how often overlooked this necessity is! This will obviously differ depending on how much you drive your car, and the estimated cost per driver in 2016 was around $170 per month according to The Energy Information Administration.

Find a Great Warranty

auto warranty

Don’t let a price of a car let you look past either a good or bad warranty. These can be crucial in the used car market for obvious reasons.

Most used car companies offer some type of warranty, but one that beats out ANY warranty in the tri-state area is the B&B Warranty.

  • 30-Month/30,000 Mile Warranty
  • 30-Month/30,000 Oil Changes
  • 30-Month/30,000 Tire Rotations
  • 30-Month/30,000 Towing Assistance
  • Lifetime State Safety Inspections

Don’t let yourself get to the point of receiving your first monthly payment and realizing you went over your budget. Doing research and following these tips will allow you to make a wise purchase on a quality used car.

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How To Budget For Your Next Car