Tips On Budgeting for Vehicle Purchases

Consider all the Costs

Besides the car payment, you should also consider that insurance costs are normally between 5% and 8% of the purchase price with a new car. You can reduce these costs by getting a late-model. The premium for liability coverage probably won't be much different than your previous car, but the collision and comprehensive portion is where they get you. If you're buying new, you shouldn't have to worry too much about repair/maintenance costs though. They come with a three-year warranty that will cover the cost of major repairs (but not routine maintenance, like oil changes). A new (or used) car typically requires new state registration ($50-$125). To budget for total security, you should allocate 10% to 15% of your monthly budget for automotive expenses—do not go over 20% of your monthly income on car loan payments.

There are many components of your vehicle purchase that you should be aware of. The initial costs include (1) down payment (2) taxes (3) state fees (4) dealership documentation fees and (5) misc. dealership fees. Recurring costs include (1) monthly car payments (2) maintenance (3) car insurance (4) gas (5) state registration renewal, and (6) tax. You may have other costs to deal with if you live in metropolitan areas, like parking. If you want to upgrade or customize your vehicle, consider these costs too. The most important part of vehicle purchase tips for budgeting is knowing what you're paying for.

Insurance Rates

If you want tips for budgeting , you can choose a model with a good safety record and low theft rate. If you have a model with great safety features, your insurance rates will drop! The location you're driving in also has an impact on your rates. Metropolitan rates might be higher, because there are more opportunities for collision. You can always call your agent to get a quote if you're on the fence about which model to purchase. It's pretty easy to find the safety record of vehicles online, so you can get accurate information for your potential buy. You might even look at theft records to see which models get stolen the most, since this can affect your insurance rates.

Auto Loans

The first step in creating a budget is to determine what your income and expenses are. Income is the amount you actually take home, not the gross pay. You can opt for an auto loan if you're uncomfortable paying up front. These monthly payments might have high interest rates, so be sure to check that out first. An auto loan calculator should be able to give you an estimate of your payments.

Make a Larger Down Payment

Probably the scariest part of any vehicle purchase is the down payment, but it's not the part you want to skimp on. If you want tips on budgeting for vehicles, the key is to make a big payment. Making a larger down payments means you won't have to pay as much on interest, and your debt won't look so daunting. There will be fewer total payments to make over the lifetime of the loan, so you can pay off your car early on. Best of all, a larger down payment means you own a greater share of the car. If you need to refinance the loan or sell the car, this will be helpful. Ideally, 20% of the total cost is the number to shoot for. Even if a dealership claims that they will offer you '0% down', there may be strings attached. Normally these offers are reserved for those with an amazing credit score.

Extra Tips

According to the Las Vegas Review Journal, some tips on budgeting car purchases can help ensure that you get the biggest bang for your buck. Their number one recommendation is to only buy a car you can pay for with cash. Otherwise, you're paying interest on something that's actively losing value. It can also be a good idea to get preapproved for a car loan before heading into the dealership. That way, you can compare dealer interest rates to auto loan rates. You should not take out an auto loan for any longer than 48 months, since longer loans correlate with the borrower's failure to pay them back. Be up front about a trade-in, so you don't waste anyone's time.

If you want to get a good deal on a vehicle, check the inside of the driver's door jamb for the manufacturing date of the vehicle. Cars that are more than three or fourth months old may come at a better rate since dealers are more eager to get them off the lot. You can also negotiate by email to ensure you don't get flustered face-to-face and have access to online tools when negotiating. You can wield the power of the internet with your smartphone as well, so double check a salesperson's claims if you suspect fibs at the dealership. When face-to-face negotiating, actually leave the dealership if you're unhappy with how things are going. More likely than not, the dealer will reach out to you with a counteroffer. If not, go see whether other dealers will give you the price you're wanting.

Bigger doesn't always mean better. If you're wanting those big wheels with tiny tire sidewalls, think again. Not only do bigger wheels cost more, but they also negatively impact your fuel economy. Cutting out extra amenities like these can help you in your in your budgeting efforts.

For a dealership that will work to get you the car you need and vehicle value estimates you can trust, contact Robert Brogden's Olathe Buick GMC. Take advantage of specials to save on money too!