subject: Sticking to a Budget When Shopping for a Used Car [print this page] Sticking to a Budget When Shopping for a Used Car
Shopping for a new car, even if you are going the used route, can be very exciting. With so many options, from paint colors to upholstery styles, it can be a bit overwhelming trying to narrow your search down to the perfect vehicle. Before you even begin looking, though, you should sit down and determine a budget. Cars are expensive, and even though you may not see a big difference between $13K and $15K your bank account certainly will. So, to avoid financial disaster, and heartbreak, you should set a budget before you begin your search for the perfect used car. Setting up a budget can be a bit confusing if you have never done it before, but as long as you stay organized it is a pretty simple process. Follow these steps to establish how much money you can spend per month on a car payment:1. Determine how much money you make per month. If you are on salary this should be easy, but if you have a paycheck that varies from week to week you should find an average. To do this, reference old paystubs. Many companies cut and add hours as their payroll deems necessary, so coming up with a dependable number may be hard. If you have a set minimum amount of hours that you work go ahead and use that figure, as it will guarantee that your finances can handle the budget you develop. 2. Total your monthly expenses. Bills for rent/mortgage, cable, internet, cell phones, and insurance are fairly static, but others like utilities, gas, and groceries can be more difficult to determine. First, add up the static bills. Then, set aside a specific amount of money to spend on the rest of your living expenses (you can use old receipts and personal financial records to come up with a realistic number). 3. Subtract your expenses from your income. This should give you the total amount you have to spend on your car. Whatever this number is, do not, under any circumstances, sign papers for a loan that exceeds this monthly allotment. 4. Compute the amount of money you can take out in a loan. This can be difficult, but the Internet has several loan calculators that you can use. Many dealership websites will also provide this resource so that you can accurately determine how much money you can spend on your used car. When you find the magic number that your budget can bear, it is time to go shopping. The first step onto the lot can be exhilarating, but remember to only look at cars that you can afford. Oftentimes people who are not careful about sticking to their budget fall in love with cars that are way too expensive-- and consequently get either their hearts or their bank accounts broken. By preparing yourself, and your budget, for the expense of a car payment you can easily adjust to the new demands on your wallet and pick out a car that you will enjoy, not one that you will regret purchasing.
