If you are new to budgeting, you may wonder how much you should actually spend on a car without spending an entire year’s salary on it. When you’re buying a car for the first time, it can seem like a daunting task, and it can be hard to know how much you should pay.
The first step is to acknowledge how much you make, if you earn 60,000 a year, you will want to sit down and look at all your finances. You will want to look at all of the other bills you pay and find out how much extra you can spend and what you’re comfortable with. Every person is different and has many various expenses, so it is really up to you and what fits with your lifestyle.
Keep in mind that there will always be hidden fees that may not come to light until you own the car for a little while.
You make $60,000
A good rule of thumb is to put down 20 percent of a car and be able to pay it off in less than four years. If you plan it our strategically and feel comfortable with it, you could afford up to $541 if you make $60,000 a year.
However, if this is your first car going safe and more budget-friendly should also be an option for you. There are many things to consider when buying a car, all of which can change the amount you are paying for a car. If you lease a vehicle, it could be more expensive if you take out a loan with a bank, it could be slightly cheaper and give you a firm budget that you can afford. It is essential to look at every option and go for the amount that is good for your unique lifestyle.
Things to keep in mind when buying a car
A new car is likely to be more expensive than an older car. If you don’t need the latest car and can find a used car in good shape with low mileage, it could be a better fit than spending your entire budget on a new car.
When you go pick out a new car, they will show you vehicles that may be somewhat out of your budget, but be sure to be firm. This will be your car, and your finances, you are allowed to set this boundary and stick with them. If you are firm enough, they may even cut you a deal.
When you pick a car, be aware that there will be other things to pay in the future besides a lease or a loan. You will need to pay for car insurance, which is required in most states, but not all. There will be the gas to pay every week, and the larger the gas tank, the more money it is to fill up. You will also need to pay one-year fees, and some of the expenses like registration will be more expensive, depending on the car.
How registration works
There will be a base to pay every year, and then depending on your car, you will have to pay extra sometimes up to a few hundred dollars extra. If you get an older used car, the fee is usually less than a new car. Sometimes all of these fees add up so much it adds a few thousand dollars to the vehicle you own. This is another crucial thing to keep in mind when shopping around for a car.
Car shopping always seems straight forward, but you will find that there are many extra things you will need to pay for. So, choosing a budget for overall price and not just month to month is very important.
Paying outright in cash
Sometimes if you save up for a car, you have the option to pay for a car in cash. Sometimes this is the best way to go about it if you have already budgeted and saved up $20,000 dollars of the $60,000 you made in a year.
However, that is not always the case, if you are leasing a car, you may get an excellent interest rate. This could help your credit in the future. However, if you have bad credit and can’t get a lease saving up 500 a month until you have enough for your car could be the best option with you.
Not only can cash be a great thing, but it also makes for less tedious paperwork. You will also own the car outright. When you lease the vehicle, you make payments till you own it, and that could take a few years.
Be honest with what you need and what you have to offer. If you have saved up, make sure it is the best option for you. Look at your credit score and decide if leasing will help or hinder this score. Owning a car is a good step in proving you can pay off something, and it will show people you can make monthly payments if you choose to lease a car.
Paying for a car is scary, figuring out what your budget is can be challenging, and knowing what kind of car you want is crucial. You will want to set your budget and explore every possible option in order to get the car that fits your lifestyle.
When looking at cars, make sure you keep in mind the future fees you will have to pay because this may shape your decision on a certain car. Not all states require car insurance, but it is another thing to think about when buying a car, a newer one will cost much more and may go beyond your budget. Think carefully and before buying, you should look at other ways to save yourself money.