Fitting That New (Used) Car Into Your Budget
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(ARA) - It’s been said that buying a car is the second biggest investment
anyone will make in his or her lifetime. But those who try stretching their
budget to afford that car can turn the investment into one big headache. Before
setting out on the journey for your new ride, it’s best to know the limits of
what you can afford and stick to them. Simple research and cost management can
help you avoid problems from the get-go.
* Calculate your total monthly expenses and determine the remaining amount
available from your monthly income.
* Estimate and include fuel costs in your expense calculation, especially if
the vehicle will be driven to work or school everyday.
* Check insurance rates. They’re normally lower for used cars versus new
ones, but will vary based on the individual and specific vehicle.
* Take into consideration other associated costs like personal property
taxes, license and registration fees.
A good rule to follow is that your monthly loan payment should be no more
than 20 percent of your remaining monthly income. Lenders will typically expect
a minimum down payment of 10 percent, but if you can afford to put down more, do
so. Increasing the down payment will cut down on the principle of your loan and
lower your monthly payments.
Buying a new car has its obvious advantages, but when working with a limited
budget, price is normally the driving force behind one’s decision. On average,
the cost of a used car is about half that of a new one. Given the improved
quality of cars over the last decade, there are increasing numbers of reasonably
priced used cars available in good to excellent condition.
According to the NADA (National Automobile Dealers Association), franchised
new-car dealers sell over 19 million used cars per year. Consumers can utilize
numerous Internet sites that provide tools, like Carfax’s Hot Listings, to
help them find used cars in their price range and location. Hot Listings
provides users with a directory of vehicles available at local dealers that
match specific search criteria. A free Carfax Vehicle History Report is provided
for each vehicle.
Mike Tompkins, who purchased a used car, agrees with the value of services
like Carfax. During his search, he discovered that the car he was buying had
been in an accident, though it was eventually cleared through an inspection. “Twenty
dollars could save you a lot of headaches,” he says.
Once you’ve settled on the pre-owned vehicle of your choice, it is strongly
recommended to have the car inspected by a qualified and trustworthy mechanic.
Make sure to check the vehicle’s history by purchasing a Carfax report by
visiting Carfax.com. Any problems that either the report or mechanic may uncover
can either be used as bargaining tools to help lower the cost of the vehicle or
as proof to avoid the deal altogether.
Courtesy of ARA Content
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