How to Budget for Your First Car

How to Budget for Your First Car

There’s no experience quite like buying your first car. Shopping for the perfect one, picking out the color, brand, and model, and taking each of your picks for a test drive, is all part of the fun and exciting process.

Unfortunately, finding the perfect car is easy; finding it for the perfect price is the hard part. Before going car shopping, and possibly falling in love with an automobile way above your price range, take the time to figure out what you can afford to spend and pay each month. Take these four steps to figure out how to budget for your first car.

1.    Figure Out Your Payment

The first step to budgeting for your car is figuring out what you can afford to pay each month in car payments along with your other expenses. Break down your monthly budget into absolute necessities and then figure out how much of what you have left you’re willing to put towards your car. Make sure you consider other car costs a part from the payment itself. You’ll want to make sure you have income left over to accommodate any car maintenance, such as tires, insurance and oil changes, and of course, have enough left over for gas as well.

2.    Know How Much You’ll Put Down

The next step you’ll want to take when deciding on your first car is calculating what you can afford to put down as a down payment. Take into consideration the fact that you might receive better interest rates if you put more down to begin with. Again, however, you don’t want to put down more than you can afford to the point that you’re unable to make the next monthly payment.

3.    Figure Out a Timeline

Once you’ve decided what you can pay each month and what you’ll put down, it’s up to you to figure out your timeline for purchasing your car. For the most part, what you can afford each month will play a big part in how long you’ll have to save. However, if you feel you need a car sooner, you may need to rethink some things. Don’t just be impatient, because saving too quickly is unrealistic and will likely put you in debt. That being said, if you can’t afford to wait, you may need to search for a different, more affordable car.

4.    Start Saving

Of course once you’ve figured out all the details, all you have left to do is start saving. This can be the hardest part, but be sure to stick to your budget and keep on a steady track. Set up a direct deposit or separate account and saving will be easier than you think.

Your first car is a major purchase, and figuring out and sticking to a budget might seem easier said than done. Nonetheless, no matter how far off that new car seems, the moment you drive it off the lot, all your hard work and savings will be more than worth it.

Did you set up a payment plan for your first car? What are some of your tips for creating the appropriate budget for your first car?

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