Set a Budget for Your New Car

May 8th, 2019 by

Deciding to buy a new vehicle is usually an easy decision; however, figuring out how to afford a new vehicle is another thing entirely. According to the experts at our car finance center near Fort Worth, TX, setting a budget for your new car makes the process a lot easier. Since it can be difficult to set your own budget for a new car, here’s a few ways you can go about doing this.

Monthly vs. Yearly Payment

To figure out how much you can afford to spend on a vehicle you can go about it two ways, generally. Some people prefer to deal with this in terms of monthly payments, meaning how much they can afford to spend each month on their new car. When calculating this, it’s important to factor in other monthly costs like automobile insurance, gas, and regular vehicle maintenance.

Others tend to look at how much they can spend on a new car at a more macro-level. This means that they look at their annual income and deduce how much they can afford to spend on their vehicle. Typically, people will spend anywhere from 10% to 20% of their annual income on their car, so that they can comfortably fulfill other financial obligations.

Down Payments & Trade-Ins

Since buying a new vehicle is such a large purchase, many drivers want to find ways to reduce the overall cost of their vehicle. To reduce the overall price of your vehicle, consider trading in your current vehicle upon purchase. If you want to reduce your monthly payments, make sure that your down payment is sizable enough to mitigate the overall cost.

To learn more about budgeting for your new car, visit Moritz Chrysler Jeep® Dodge RAM.

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