​Can You Afford a New-to-You Vehicle on Your Household Budget?​

The average consumer is dealing with rising costs, but there are ways to keep everything affordable within your household budget. That includes affording a pre-owned vehicle. Affordability is a huge question we all have. When you review your budget, the big question is whether you can afford a new-to-you vehicle now. You’re up against a lot these days, not just in higher vehicle prices, but also in the rising costs of fuel and insurance premiums. 

There are many questions you should ask yourself before you start looking at a pre-owned vehicle. There are several resources available to help you determine whether you can afford a vehicle. Kelley Blue Book and NerdWallet have online calculators that can let you see what a monthly payment would look like. That way, you can plug the numbers and see if you can afford a vehicle. 

The first question you should ask is how do you determine whether you can afford a vehicle? As a rule of thumb, your monthly automotive expenses should usually be around 15 percent or less after your paycheck. Those monthly expenses include your loan payment, sales tax, vehicle registration fees, insurance, fuel, maintenance, and repairs.  

After you crunch the numbers, it was suggested by the insurance and financial firm USAA to “take a test drive of your budget.” What they mean is to set aside the money you would spend on vehicle ownership costs and put it into your savings account for a few months. It works to your advantage to have a “head start” on what you can afford when it is time to replace your current vehicle, based on any changes in your insurance premiums and expected monthly loan payment. Your fuel cost might change depending on the vehicle you get, as well as pump prices during that period.  

Your next vehicle should reflect where you are in life. If your family grows, you want to look for something that will fit them comfortably – including child seats. Are you an active person or someone who uses their vehicle professionally? Find something that fits what you need to bring with you. Most importantly, find one that fits your budget perfectly.  

One thing many financial institutions advise against is overstretching your car payments. The key to keeping your credit score healthy is not only about making your payments on time each month. The amount of debt you have can also have an impact. Be realistic about the term length of your loan. If you are looking at an 84-month loan, you have to ask yourself whether this vehicle will continue to serve you as well as it does now by the time you reach the end of the loan.  

There is a lot more to discuss, but know that another resource is not far from home. The sales and finance staff at Barry’s Chevrolet are experts in helping you afford your next vehicle. Contact us to set up an appointment to discuss your next steps when your current vehicle needs to be replaced.