How Much Can You Really Afford to Spend on a New Car?

by Buddy Evans, Vice President of Big Bucks Auto™

Are you in the market for a new car? If so, it’s important to figure out what you can afford to spend — before going shopping. By doing some simple math and evaluating your current situation, you’ll be prepared to shop for a car you want – and can afford!

How Much Can You Spend on Monthly Car Payments

The first thing to figure out is how much you can afford to spend on monthly car payments. Most experts argue that you should not spend more than 20% of your monthly gross income on a car payment. In special situations this figure may vary, but as a rule for the average adult, sticking to 20% or less of monthly gross will likely be a wise move.

Short Term vs. Long Term Car Loan

Once you determine a safe figure for monthly car payments, you should consider the loan term. Remember that a longer car loan will mean much more interest paid over time, while a shorter car loan term will mean less interest but higher monthly payments.

Coming Up with a Down Payment

And what about your current car, assuming you have or had one?

Selling Your Current Car

If you already sold your car you may have some available cash to contribute as a down payment. Any down payment you make is great as it will cut down on monthly car payments. If you still need to get rid of your current car, be sure to consider selling your car before simply trading it in to the dealer. You can usually expect much more money from selling your car than trading it in. If time is an issue, look for a reputable used car buyers like Big Bucks Auto™ in New York Tri-State Area.

If you already sold your car and have some leftover cash from the sale, consider keeping it for a down payment on your next new car. Any down payment you make will cut down monthly payments significantly.

Leased Car

If you’re currently leasing a car, you’ll need to either wait until your lease term expires – or get out of your lease early. To learn more about getting out of a lease, read “Getting out Of Your Used Car Lease”.

And if you have savings or other available cash, this may be used as a down payment as well if you choose to do so.

Car Insurance Costs

Insurance costs are another major consideration when figuring out how much you can spend on your new car. A sports car or a high theft car will likely have a far higher insurance premium than a run-of-the-mill sedan. To put this into perspective, remember that two new cars with sticker prices of $20,000.00 each may have insurance premiums which vary by as much as 50% – or more! In other words, it’s very important to figure out – roughly – how much insurance is going to cost for all of the new cars your interested in.

Car Maintenance Costs

Then there are maintenance costs to consider. Some new cars will be far more expensive to repair than others. Foreign cars, for example, may be quite expensive to repair. However, many of these cars now come with warranties and free scheduled maintenance. New offers like this may actually make cars which used to be expensive to fix, far less expensive than other ‘cheap to fix’ cars! Therefore, the maintenance issue should be evaluated on a car-by-car and offer-by-offer basis, as manufacturers and their offers vary significantly.

After considering these simple factors, you’ll be prepared to go out and shop for a car that truly fits the bill, financially speaking.

Before spending your hard-earned money to a used sports car that your salesman claims to be excellent running and as good as new, you may want to check this article first. How much money is really suited for a certain used car and how will you know if a dealer is putting bait on you?

Firstly, you must think over the price range of the car. You have to look into your savings account and decide how much you can spend. You have to allot budget for the used car and there are distinctions over the age of the car and its selling price. Such cars and prices are described below:

a.$10,000 to $18,000 priced cars are the “decent” ones which have been used for 3 to 4 years. Categorically, they are typical and not luxury cars. They are usually sold by a private owner and traded as one-owner vehicle. They can last for few more years and fairly trouble-free if maintained properly.

b.$5,000 to $9,000 priced cars are 6 to 9 year old cars which have quite a high mileage but are still in good shape. Independent car dealers normally sell used cars within this categorically. However, you will need a lot of time to choose a very good running car on this price bracket.

c.$1,000 to $2,000 priced cars are simple cars that can get you from one point to another. These are sold by private owners and with high mileage already. Car dealers do not waste their time selling trucks or cars in this price bracket. If you’ll acquire this kind, be ready to spend more money to maintain your car running.

After deciding on the type of car you would purchase, the next move is to know where you will acquire your car. You may acquire it from a private individual, a car dealer or a superstore. Checking where to acquire your car will also let you know the differences on the prices they offer. Private individual should be a good choice since salesman and stores can offer cars at a maximum price to keep their commissions. Inspect the car carefully and or you can have it inspected by a mechanic (costs $40 – $60) to make sure you get your money’s worth.

Always remember that there are extra charges such as taxes, sticker price, registration and other. Don’t forget to keep additional funds also for your insurance and car check-up.

Buying a used car can be an annoying process and there are many things to consider. But this is the only way if you want to make a wise decision of investing your savings on a good-running car that will be useful for an extended period of time.

For most of us, the idea of buying a new car fills our hearts with dread. We nervously approach the salesperson. We discuss. We haggle. We finally walk out of the showroom with the keys in our hand, but we can’t shake the feeling that we may have overpaid for the car.

How do you know what you should be paying for a new car? The answer is easy: Do your homework. A little bit of time spent researching at home gives you the option of purchasing a car with confidence.

The sticker price

The sticker price of any vehicle is a nice bit of fiction. It is an inflated dream the dealership would love to realize. Car salespeople tell you that the sticker price should be the starting point of your negotiations. It shouldn’t be. In fact, the sticker price bears no relevance whatsoever to the proceedings to come. Don’t even look at it. The only reason to glance at the sticker in the window is to determine what options are available on that specific car if you are thinking of purchasing it off the lot. Otherwise, disregard sticker price entirely.

Where do I start?

Your research should be complete before you ever leave the house. Begin by choosing the perfect vehicle. All car manufacturers have detailed websites that allow you to research the vehicle thoroughly and even “build” an ideal car. Once you have found the ideal car, it’s time to find out how much the car really costs. Again, the internet is your friend.

Many websites offer insight into how much the dealership actually paid for the car – the invoice price. This price should be your starting point for negotiations. Once you know what the dealership has paid for the car, you can figure out what a reasonable profit would be.

Think you’re done? Not quite. While figuring out the profit margin of the dealer can be a good strategy to getting a better price on a car, there are a few other things to consider as well.

Check to see if the dealer is receiving any rebates from the manufacturer on the vehicle. These rebates are offered to dealers on certain models. If a rebate is available, then even if the dealership sells at or below invoice price, they are still making a profit. Most car-comparison websites offer this information.

Consider the popularity of the model. If you are trying to purchase a car that is in extremely high demand, you may find that there is no negotiation. The sticker price – or even above – may be the best deal you’ll find. Thankfully, this is an unusual situation. With most car models, there is significant room to bargain a price you’re comfortable with.

Once you’ve gathered all your information, you are ready to shop. Visit several dealerships and see who offers the best price. Once your salesperson realizes you are armed with all the inside info, you’ll get the best deal possible.

This is highly subjective. BMWs are extremely unreliable and cost a fortune for simple things once the warranty expires or anything needs to be fixed. Mercedes is not tremendously better when it comes to expensive maintenance but they are generally far more reliable than BMWs. And Saabs… well they’re known for the million-mile Saab, unsurpassed safety, class-topping speed, and Swedish build quality.
Sixty thousand miles isn’t much. The only brand that would concern me at that point is Audi. They are known for being outrageously unreliable and this isn’t just hearsay or a reiteration of Consumer Reports — I did own an A6.
Saabs are very expensive to maintain but they have the fewest weak spots in costly areas of the car. By this I mean that the things you’d fix in a Saab are different from what you would fix in a BMW or Mercedes. Saabs have quirky electrical systems which are super easy and cheap to fix. They also tend to need a new turbo ($1500) by 175,000 miles. BMW issues include transmission failure, gearboxes shattering, and electrical problems. Audi doesn’t have one particular weak spot. Generally, the whole damn thing is a weak spot and for what you get, it’s not worth it. There are much faster, nicer, classier cars available for the same price.

I’m looking at a 2002 BMW 530i. I own a Mercedes now, and I’m paying out to much on it. So how much are the average repairs for this paticular automobile.
EX)
Oil Change: $–
Etc. Etc.
Thanks for the help.. best answer 10pts..!!!

I got my Drivers License a month back. Today I rented a car (and fortunately with a full insurance cover) and ran into another car and got a ticket that says “Inability to control car” or something like that. I am planning to buy a car pretty soon. Could any of you give me an idea as to how much my insurance will be effected as a result of this mishap?
I would appreciate any replies.

i live in Massachusetts and am debating between an M3 or a mini cooper… both are extremely fun to drive but i was curious on M3 insurance. Also wouldn’t mind advice on what other people would choose. currently have 12k saved… the mini cooper s will be brand new at 24k and the m3 will be around 34

I have a 95 325i and i was just wondering how much it cost brand new back in 1995?

A 1995 bmw 325i is for sale but it says it needs a head gasket, can someone tell me how much it would cost? the car is for sale for 3400

I never had any complaints about my transmission until I had the transimission fluid changed a few weeks ago but it turned out the mechanic did not completely fill the transmission and when I had it checked after 3 weeks the new mechanic said he couldn’t see any oil measured on the dip stick so it was pretty low. There are no leaks in the transmissio so it wasn’t leaking. Can driving it an hour a day for three weeks ruin the transmission when it is that low? The transmission is a 98 Honda automatic with about 199,000 Km on it.