Determine your budget
It is amazing. Most people have only a vague idea of what they can offer when it comes to purchasing a new or used car. Some people think in terms of the value of the car, while others only think about what is paid monthly.
Both approaches have shortcomings.
There is more to buying a car than the price of the car, even if you pay cash. There is insurance, fuel and maintenance to just name a few. The purchase of any car – whether it is from the showroom or used – can have high insurance prices. The maintenance of a car, even one of three years old, may need repairs sooner than you think. Fuel costs vary widely and be a significant part of your budget.
Do not buy a car with only a ball park monthly payment in mind. Either leasing or financing it’s a sure fire way is to pay more than you should.
Determine your budget
So sit down and look at all of your expenses, cash in hand and net wages. Try to decide what you can reasonably pay for a car. If you have not done this in the past, this a great opportunity to create a family budget.
A good rule of thumb is not to pay more than 15% of your income towards the total cost of your car.