Calculating Your Car Buying Budget

Posted: Monday, May 8th, 2017

One of the most common questions we get at Green Light Auto Credit is how much should a customer budget for buying a new or used car? There are a number of factors to keep in mind, and it differs from person to person. St. Louis area residents looking for a vehicle should check out this helpful guide, and when you’re ready to begin the financing process, contact Green Light Auto Credit for more information.

Car Budgeting Guidelines

As a general rule, your monthly car payment shouldn’t exceed 15 percent of your monthly income after taxes. This allows you to afford all your other bills and hopefully have a little money left over to save. In addition, you need to factor in fuel costs and insurance as well as total cost out the door, which can differ greatly depending on where you live. Most experts agree that you shouldn’t put more than 8 percent of your monthly income toward fuel and insurance. That also doesn’t include the vehicle’s downpayment. Keeping these figures in mind while shopping will make sure you stay in good financial shape. You might also consider an app that helps you keep track of your budget so you can be extra safe.

Consider a Used Vehicle

One way to dramatically reduce your car-related expenses is to purchase a used vehicle. The average price of a used car is $19,189, far less than the average new price of $34,067. That’s a huge difference, and if you’re financing the vehicle, it can drop your monthly payments and even allow you to choose a shorter loan term limit. You’ll still want to make sure you’re not spending more than 15 percent of your income on payments, but it can make financing a vehicle much more affordable.

Visit Green Light Auto Credit for More Information

St. Louis area customers can turn to Green Light Auto Credit for help figuring out how much to spend on a new or used vehicle. Our financing experts are happy to work with customers who are working with a fixed income or with bad or no credit, and we even offer a payment calculator to help you figure out how much you can afford. We work with a wide variety of dealerships to make sure you get the vehicle that’s perfect for you and your family. Contact us today for more information.

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