How to Budget for Your New Car

How to Budget for Your New Car

How to Budget for Your New Car

Leather interior. Rearview cameras. Automatic emergency braking. While you may dream of a shiny new car with all these features and more, you may need to prepare. You must consider your needs, budget, and other financial priorities. Then decide how much you can and wish to spend to meet your transportation needs. Whether a used or new vehicle, we’ll try to make the decision easier for you. You want a car, but how much can you afford? The only way to know is to figure out a monthly budget.

Do the math

Start with knowing your regular monthly take-home income. This is how much you earn after taxes. Experts recommend spending 10%–15% of your income on transportation, including car payments, insurance, and fuel. So, for example, if your take-home pay is $4,000 per month, you should spend $400 to $600 on transportation.

Existing Debt

If you have debt like student loans, medical bills, or credit card balances, your payments may consume a big part of your income. Lots of debt will trim that car-buying budget. Next, list your monthly expenses: rent, food, utilities, cell phone, and entertainment. Be as thorough as possible, and most importantly, budget for savings.


Lenders review your application and credit score when you apply for a loan. Once your loan is approved, the interest rate will be set. Although your interest rate affects both your monthly payments and total repayment costs, a lower rate means you will spend less over the life of the loan.

Taxes and Fees

Okay, now that you know what you can afford, remember to look at the total vehicle cost, including financing. When buying a car, the purchase price is only part of your entire layout. You’ll also pay fees and, in most states, taxes. If your state charges sales tax, you’ll pay that on the purchase price minus any discounts and trade-in allowances. You must register your vehicle. Registration fees can range. You will have to pay for your vehicle’s title and license plates. In some states, documentation or dealer prices are expected. These fees are in addition to the other costs and vary by location.

Car Insurance Premiums

Drivers are required to carry liability insurance in nearly every state. However, most drivers also opt for collision and comprehensive coverage for extra protection. Remember that the car you drive affects the amount of insurance you pay. New, more expensive vehicles usually cost more to insure, although exceptions to this rule do exist.

Trustworthy Auto Financing Near Me

At Warren Henry Auto Group, we offer competitive financing rates and terms on our great selection of new and used trucks, cars, and SUVs. Our finance experts guide you through the financing process and help you get into your new vehicle. Contact Warren Henry Auto Group’s finance team today, or if you’re ready to start the financing process, you can fill out our secure finance application online.

Contact Us

We would love to hear from you! Please fill out this form and we will get in touch with you shortly.
  • This field is for validation purposes and should be left unchanged.