Setting Your Used Car Budget

Setting Your Used Car Budget

Brought to you by Easterns Automotive

Before you step foot into the dealership, you need to take a moment to decide what car payment you can afford. The best course of action is to spend 10% of your take-home pay on your car payment. That way, you can keep the total car cost between 15% and 20% of your total income. It might give you a feeling that you can only afford a beat-up Pinto. But if you take a balanced budget approach, you should be able to afford a suitable car for all your needs. If you are shopping in the greater VA, MD, or DC area, the team at each of our Easterns locations is here to support you in your shopping experience every step of the way. If you are interested in getting pre-approved, you can do so right online! And if you have questions or concerns about 'what' you might be able to afford, please browse our inventory online, or give us a call.

Keep Your Budget Balanced

When you are balancing your budget, its best to follow a simple 50-30-20 rule, which divides your pay into three separate categories. Fifty percent of your take-home pay should go to housing, food, and transportation, which in this case, is your monthly payment for your car and related car expenses. Thirty percent should be for your wants, such as entertainment, travel, and other nonessential items. The final twenty percent should be used for paying off credit cards and meeting your long-term financial goals. Your monthly payment for your auto loan should fall into the needs category. For most people, a car is an essential item in their everyday life. It allows people to hold down a job or transport their kids to school. In the balanced budget approach, you do get some flexibility. If you want a more expensive vehicle, you can put part of your payment into the "wants" category if you keep your budget balanced. While ten percent of your take-home pay towards your car can sound a tad restrictive, if you are economical with your budget, you might be able to spend more on your vehicle.

Your Payment Isn’t the Only Expense

In addition to your car payment, you are bound to have more auto-related expenses, which include insurance, gas, maintenance, parking, and tolls. You should keep your total car costs between fifteen and twenty percent of your take-home pay. While your car payment is ten percent, add on another five for car expenses. You can also take into account what you might get for your trade-in. At Easterns, we make it easy to sell us your car! Just give us a call to schedule a trade-in value appointment.

Sticking to your Budget

Once you have decided on how much you can afford for your car payment, you need to make sure that you stick to the budget that you set. We admit it can be hard for may buyers, but it's particularly essential for those who don't want to spend too much on their next car. If you make a budget, it's vital to stick to it. It is particularly important if you tend to get easily swayed by exciting new options that add to your vehicle's bottom line. When you make a strict budget, it is easier to talk yourself out of going beyond your budget. Is your dream car out of your current budget? If your current vehicle has a little life left in it, be patient, and give yourself a few more months to save.  If you need another vehicle immediately, try and be open to other options. At Easterns, we have such a HUGE inventory at various price points. If you open up your search do other brands or model years, you may just find out that having a vehicle that meets all of your needs is the smartest choice. 

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