It’s time for you to buy your next vehicle, and you’ve had your eye on a reliable ride to take you around Morrisville, Bristol, and Levittown, PA. To fully prepare yourself for your new driveway addition, you’ll need to learn how to budget for a used car.
This is a process that comes with a lot of questions, so the financing team at Grace Auto Group has put together some helpful tips to help you get started.
Establish a Budget
No two drivers are the same, so no two budgets will be the same, either. Follow these steps to craft the ideal financial parameters for you:
Determine Your Current Income The first step in creating an accurate budget is to determine your current income. You can find this number on your previous W-2 form, which will show you your income with the taxes subtracted.
Calculate Monthly Expenses Now it’s time to calculate your monthly expenses. Consider everything from your student loans and cable bill to how much you spend on groceries on average. After determining how much you have left over at the end of the month, you’ll be able to see how much you have for a car payment.
You also want to make sure your car payment doesn’t total more than 15 percent of your monthly income.
Add in Additional Costs The last factor you need to consider when building a budget is the additional costs of purchasing a vehicle. When you buy a used car, you’ll also have to pay taxes, registration, title fees, and documentation fees—all of which can affect your budget.
The biggest additional monthly expense you’ll also need to take into account is your car insurance.
Make Adjustments After figuring out a rough estimate of your insurance and other additional costs, you’ll need to make the necessary adjustments to your monthly payment budget. Once that’s done, you’ll have your ideal payment plan in mind!
Used Car Financing Tips
In addition to building a budget, there are a few tips you’ll want to follow to ensure you’re making the finance process as simple as possible.
Know Your Score Learn your credit score before you start applying for financing to ensure you have a better idea of the type of rates available to you. This also ensures there are no surprises.
Choose a Short Term It may be tempting to choose a longer finance term with a lower monthly payment. However, a shorter term means less interest accrued over time.
Focus on the Down Payment Aim for a larger down payment to help alleviate your monthly expenses. On average, you would want your down payment amount to be around 20 percent of the car’s total value.
Pay for Fees in Cash If possible, pay for your fees in cash instead of financing them to help lessen interest accrued.
Consider a Cosigner If your credit score is not where you’d like it, consider asking a trusted family member to be your cosigner to help lower your rate.
Find Your Next Used Car Today!
Now that you know how to budget for a used car, you’re ready to visit Grace Auto Group to find your next vehicle. We have plenty of vehicles to offer our neighbors like you throughout the Morrisville, Bristol, and Levittown, PA, areas, so you’re sure to drive away with a smile.