When it comes to purchasing a new or new-to-you vehicle there are plenty of factors to think about before heading to the dealership. When thinking about your wants and needs you'll narrow down what you're looking for in a vehicle and what you'd be comfortable driving day-to-day. One of the biggest questions you'll need to answer is how much money you can spend on your next vehicle.
Monthly payments
When deciding how much you can spend on your next vehicle, knowing how much your comfortable paying each month is a major key to finding the right vehicle for you.
When creating your budget, find what makes the most sense for you and a monthly payment. Things to keep in mind when factoring your monthly payment:
- other expenses
- down payment
- interest rate
While keeping these in mind, you'll be able to focus in on what your monthly spend payment should be. Just starting your car hunt? Financial experts say your car payment, along with other automotive expenses (maintenance, insurance, fuel, etc.) should not total more than 10-20% of your take-home pay.
Think about your down payment and trade-in
When you're thinking about making your next vehicle purchase, keep in mind the down payment you're looking to put on your next car or the trade-in value of your current vehicle.
If you have a vehicle that you're looking to trade in, use resources like Kelley Blue Book and Edmunds to see the trade in value of your current vehicle. By doing so, you can have a good idea of what to expect when you're going to trade-in your vehicle.
If you don't have a vehicle to trade-in, having a substantial down payment can help lower your monthly payments. By putting money down right away, you're putting yourself in a good spot to start your loan out as well as cutting down the terms of your loan.
Understand the loan process
Buying your next vehicle should be an exciting time, but for many the loan process can cause a headache. By doing your research beforehand, you'll be able to have some insight about interest rates and what your car loan might look like.
Knowing your credit score can also help you determine what type of loan you'll be able to get. When you're at the dealership, be sure to ask any questions you have during the loan process to know if you're getting the best rate possible.
Understanding how much you're able to spend on your next vehicle can take a big headache out of shopping. Knowing your budget opens the door for the variety of vehicles you can look at.
When you're ready to make your next purchase, Poquet is ready to help you through the car-buying process from the financials to finding you the perfect vehicle.
