How to Budget for Your First New Car

NEW YORK, February 27, 2023 (Newswire.com) - iQuanti: Whether you're a new driver or relocating to a place requiring a car, you may be wondering how to budget for your first new car. New cars don't come cheap and can cost tens of thousands of dollars, which makes a personal loan a good idea. The good news is you can take steps to find the ideal vehicle without breaking the bank.

Here are some helpful hints about how to budget for your first new car: 

Do your research 

Your first step is to determine what kind of new vehicle you need and maybe even how long you plan on keeping it. There are basic vehicles to get you from point A to point B without bells and whistles. Others are luxurious and come with every tech and safety feature you can think of. There are electric vehicles, hybrids, and internal combustion cars. There are sedans, SUVs, crossovers, and pickups. Some vehicles are imported, while others are from American manufacturers. With so many choices, it's crucial to complete your research and decide which type of vehicle you want.  

Follow the 10% rule 

If you have plans to finance your vehicle, your monthly payments should be no more than 10% of your net income. This might mean you choose a compact sedan instead of a full-size, fully-loaded SUV. By doing so, you'll be able to make your monthly payments and won't have to worry about a potential repossession.

Consider the total price 

In a perfect world, you'd buy a car without worrying about other costs. The reality, however, is there are what amount to the hidden charges of owning a vehicle. For this reason, you should set aside another 10% of your net income to cover the cost of registration, gas, car insurance, repairs, and routine maintenance like oil changes and tire rotations. Without wiggle room in your budget, a car can quickly become a financial burden.

Decide if you'd like to buy or lease

You'll also need to decide if you want to buy or lease your new vehicle. While buying a car is usually the more cost-effective option, especially if you plan to drive it for a long time, leasing may make sense in some situations. A lease is worth considering if you prefer a new model with the latest and greatest features but can't afford to buy it outright. Keep in mind there are different kinds of leases. For example, dealer ads will often feature low-mileage leases, which have lower monthly payments but could be very costly if you exceed the mileage allowance and need to pay extra. A lease might be a good fit if you like driving a new car every few years. 

Save for a down payment 

In most cases, a down payment is required, even if you're leasing or using a personal loan to buy a car. Whether a deal with a low-down payment or no down payment at all is available, it's in your best interest to put down as much of a down payment as possible. A larger down payment means lower monthly payments. It can also make it easier for you to own your vehicle free and clear sooner.

Be strategic about when you buy 

There are certain times of the year when it's more likely to land a great deal on a car. By knowing when they are, you could save thousands of dollars on your purchase. If you can, wait to buy a vehicle at the end of the month, on Mondays, on Black Friday, on New Year's Eve or New Year's Day, or when a model has been discontinued.  

The Bottom Line 

Budgeting for your first new car is no easy feat. However, it's essential if you'd like to keep your finances in good shape. To budget for your new car, research, follow the 10% rule, consider the total price, decide if you'll buy or lease, save up for a down payment, and be strategic about when you buy.

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