Purchasing a new car is a rite of passage that will help you gain safety and gas efficiency, lower stress, and reduce costs at the gas pump. Here are four pieces of advice for budgeting for your new vehicle.

4 Tips for Budgeting for a New Car

1. Set a Final Budget

It’s easier to set a savings goal when you know how much you’re willing to spend. Decide if you’re going to purchase the new car outright or pay monthly loan fees. If it’s the latter, choose an amount that you can allocate for vehicle costs each month.

2. Decide on a Down Payment

Many people purchase vehicles with automobile loans that require down payments. You must pay this amount upfront to lower the total amount of the loan. Some loans require a specific percentage for down payments, like 10 or 20 percent. If you’re buying a $35,000 car, that may mean handing over $7,000 on the day you buy it. This number provides a great first savings goal to work toward.

3. Budget for Car-Related Expenses

The costs don’t end once you purchase a car. Make sure that you also budget for vehicle maintenance, insurance, and gas. Check out review sites like Angie's List and Yelp for reviews on local mechanics to find one who offers timely service and fair prices for oil changes and tire rotations.

Follow the same process and ask family members or friends which car insurance companies they use. Look into discounts for first-time car owners, completing driver’s ed, or driving safely. Estimate how many miles you’ll drive per month and multiply that number by the average price of gas where you live. Combine all these costs to understand how much you’ll need per month outside of the car loan.

4. Establish Automatic Savings

It can be challenging to remember to move part of every paycheck to a fund for purchasing a new car. Make this action a no-brainer by setting up your check or bank account to automatically transfer a percentage from every deposit into a savings account, where it will earn interest while you accumulate the amount needed for a down payment.

 

If you’re looking for a new or used car, visit Jack Kain Ford Inc. in Versailles, KY, to browse their wide selection. Our family-owned dealership offers honest information and affordable prices, including a 3-day Money Back guarantee (excludes Back Row Joe's). Call us at (888) 685-1211 or visit the www.KainFord.com for information on our virtual test drive videos, on-sight service technicians, and regional incentives.