One of the most stressful parts of buying a vehicle is figuring out how much money to spend. Each person has a different budget that they’re working with, and it can be intimidating to try and determine how an auto loan fits in with your income and expenses. That’s why we wanted to put together this guide to help car shoppers answer the question, “How much money should I spend on a used car?”
Crunch the numbers: How much is your current vehicle worth?
What’s your vehicle budget?
For many drivers, buying a used car makes the most financial sense. However, whether you’re looking for a new or used model, your budget guidelines are roughly the same. Many sources recommend spending a certain percentage of your income based on your situation and the type of vehicle you’re looking for. For instance, if you are in desperate need of a vehicle and it’s more of a necessary evil for you, then you may consider spending 10% of your annual income. On the opposite end of the spectrum, if cars are your passion and you’re looking for your dream vehicle, you may want to spend closer to 50% of your annual income. If you find yourself somewhere in the middle and you’re looking for a safe, reliable car you can really afford, then you’ll probably want to look for models that cost around 20% of your annual income.
3 Tips for deciding how much to spend on a car
- Consider your other larger expenses. Are you paying off student loans or a sizeable mortgage? These expenses may affect how much you can afford to spend on a car.
- Don’t forget about your savings. Rather than stretch yourself too thin, aim to find a vehicle that allows you to continue saving a portion of your income for the future.
- Do your research. Compare prospective models and explore their offerings to ensure you find a car that meets your desires (in addition to your needs).
At the end of the day, your vehicle budget a personal choice that you need to make based on your specific circumstances. That said, our team at Skook Auto Sales would be more than happy to sit down with you and help you narrow down your options and determine a budget that works for you. Get in touch with us to learn more!
