How Much Car Can You Really Afford


This is a guest post by Evan Fischer

car-you-can-afford-1449024When it comes to buying a new car, you’d be hard pressed to find anyone that would complain about going home with a brand new Ferrari or Tesla. And yet, most of us simply can’t afford these high-priced vehicles. However, that doesn’t stop most buyers from looking at (and even purchasing) automobiles that are out of their price range. But how does this happen? Even fast-talking salesmen can’t make you do something you don’t really want to. The truth is that most of us look at the sticker price on a car and mistakenly make this the magic number.

Unfortunately, this method fails to take into consideration the attendant costs that go along with automobile ownership. So if you’re trying to determine how much you can really afford when it comes to your car, here are a few things you’ll want to factor in.
1. Interest payments.Salesmen will woo you by dropping the sticker price in order to get you in a buying mood (since you may not want to back out once you say yes to the full-court press). But you need to remember that unless you’re paying in cash, you’re going to have to contend with the interest payments that are part and parcel of financing a car. And they could raise your monthly payments significantly.

2. Extras.

Aside from interest, most cars come with all kinds of extra fees, some of them optional and others hidden amongst the fine print. So if you’re expecting that the sticker price is the one you’ll actually pay, think again. You need to go over the contract with a fine-tooth comb in order to make sure that you’re aware of all the fees going into the deal.

3. Insurance.

The cost of insuring your vehicle can be higher than you think, especially if you don’t stop to find out how your insurance company charges. Most will set higher rates on cars that are sporty (two-door), lack safety features, cost a lot to fix, or are easy to steal (as evidenced by the high theft rate). If you don’t have all the facts going in, you could end up on the hook for a lot higher insurance premiums than you’ve had in the past. And don’t forget that you’ll have to carry full coverage insurance until you buy the title from the bank.

4. Gas mileage.

With gas prices fluctuating pretty wildly from year to year (and even month to month) it can be hard to guesstimate how much you’ll be spending on gas over the life of your vehicle. But if you haven’t at least considered the prospect of purchasing an alternative-fuel or fully-electric car, then now is the time to do so. At the very least you should look for something with excellent fuel economy in order to save you at the pump. But if you’re really invested in saving more over time on the costs of operating a vehicle, it behooves you to look into eco-friendly options. They may be a bit more expensive initially, but keep in mind that there are federal tax rebates for plug-in hybrid and electric cars right now (as well as some additional state rebates, depending on where you live).

5. Maintenance.

Used cars are definitely a good way to save on upfront costs, but if you wind up with a car that is constantly breaking down, you might start you wish you had shopped around for flatbed trailers for sale instead. Although you will have some maintenance costs with new cars, major issues are covered by lemon laws. However, you should keep in mind these added expenses and how they factor into your budget.

About the Author: Evan Fischer is a contributing writer for Used Pontiac Engines, where used Pontiac engines are shipped nationwide daily.