Before you buy a car…

Posted by: Live Smart   
June 22nd,
2009

there are many more things to take into account than how much car payment a month I can afford. First, lets look at the list of expenses you will have after you buy a car:

  • car payment – probably your largest amount
  • car insurance
  • gasoline
  • maintenance – oil change, new tires, belts
  • repair
  • misc. – once a year registration fee

Before you can figure out what your car payment can/should be, you need to figure out what the rest of the list will cost you and then you will know how much is left over for the car itself.

Insurance is easy. There are many sites on WWW that give you instant quotes. Just google “cheap car insurance” and you will get a list of them.

For gas, you need to estimate how many miles you drive a day, a week, a month. Then look up the gas mileage of the car you are planning to buy and what the current gas prices are. Multiply monthly mileage with gas price and you will have an estimate, how much the gas will cost you. Keep in mind that many European and Japanese cars require higher grade gas. It is more expensive, so make sure you know the type of gas as well.

The last two items on the list are little harder to estimate. Again, first look up on google “*your car model* + problems” and see other people’s experience with your car. If many people are complaining about reliability, you might be better of looking for a different model. Else, depending on the age of your car and location where you live, it would be good idea to have at least $ 500.00 – $ 1000.00 of emergency fund for larger scale repairs. Keep in mind that fixing a transmission can easily cost $ 2000.00 or even $ 3000.00, so my suggestion is actually on the low side.

Based on your monthly mileage traveled, you can estimate how often you need to change the oil, when the belts might need to be changed and when do you need new tires. The cost of all those are readily available too. Figure about $ 20.00 for oil change for a regular car (if you are looking for luxury or performance car, that can be many times more expensive) $ 75 per tire ( and you need at least two at the time).

Adding up all those figures will give you a good idea what car ownership will actually cost you and how much monthly car payment can you actually afford.

Good luck and have fun (responsibly) with your new car.

This entry was posted on Monday, June 22nd, 2009 at 1:55 pm and is filed under Living. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

One Response for "Before you buy a car…"

Wm Byatt

I would just like to point out that some of these–especially gas prices and repairs–have a tendency to be underestimated. Gas prices more notably than anything else. The fact is that when one HAS a car, one has a tendency to drive more than one would think. It’s a well-known fact of psychology that “self estimation is usually underestimation.” So when you’re taking these costs into account, it’d probably do you well to add an extra 10% or so as buffer room in case of underestimation.