How to Buy the Right Car for Your Budget


Congratulations on your decision to buy a car! Now, it’s time to get down to the nitty-gritty. The first thing you have to ask yourself is, how much can you afford? If you’re planning to finance your budget car purchase, how much can you set aside every month?

More than any other consideration, determining how much money you can come up with and then buying within your means is the most difficult part of the car buying process. Follow these 10 tips to make sure you know how much should you spend on a car based on your salary:

## 1. Establish your budget

This is particularly important for those who plan to go with vehicle financing. Regardless if you decide to buy a [new or used car>(, establishing an affordable monthly budget for your car payments is crucial. As a general rule, the amount of money that goes toward paying for buying a car on a budget should never exceed 20 percent of your monthly salary.

## 2. Identify the type of car that you need

The keyword here is finding the type of new or used budget car that you ‘need.’ If you focus more on your needs and less on your wants, you’ll find that car selection is quite the simple process. What are you going to use the car for most often? How many people will be using it? How much garage or parking space do you have on your property? On what type of terrain will you be using it on?

n any case, always let your needs propel your decision—not just for the present, but the future as well. For instance, if you plan on having children soon, a coupe is definitely out of the question.

## 3. Narrow your list to three or four cars

A few cars may catch your eye as you’re shopping around. Identify the make, model and year of these cars, then start researching each of them to see which ones fit your budget. Look their features up online to get a grasp of what they offer, and check which are available in your area. You can use Carmudi’s online vehicle platform to get an idea of what’s available near you.

## 4. Determine your overall cost of ownership

A car can be cheap to buy upfront, but expensive to own in the long-term. Cars that depreciate fast or cost more to insure or maintain fall in this category. Before you set your sights on one car, you must first compute for the long-term ownership costs of the vehicles on your short list. This includes average fuel consumption, insurance, depreciation, and maintenance. Among others.

Though there are many websites that provide information on the cost of ownership of particular vehicles, you may have to consult with a car buying professional on this one to come up with a more accurate estimate for your particular situation.

## 5. Get approved for financing before meeting with the dealer

Of course, this particular tip doesn’t apply if you plan to pay cash, but for those who plan to finance their vehicle purchase, make sure secure that financing before heading to the dealership.

This will help make the negotiating process go much smoother, as it puts a cap on how much you are capable of spending. With an approved loan, you may be able to avoid all of the unnecessary haggling often associated with the car buying process.

## 6. Find out all the possible discounts beforehand

Dealerships often have incentives available at their website, so once you’ve narrowed down your options, visit the website of each dealer on your list and check for these incentives in their ‘Promos and Discounts’ section.

## 7. Schedule a test drive

Instead of meeting with them face-to-face, it’s a good idea to get in touch with a dealership by phone or e-mail first. This will give you a feel for how a particular dealership treats their customers. If you can establish a good rapport with the contact person, you’ll be more confident when you visit the dealership’s physical location.

Once you’re ready to move forward with your salesperson, make an appointment for a test drive. Be sure not to rush the test drive process and evaluate the vehicle thoroughly. Don’t be pressured by the dealership, and ask for more time if you have to. To be on the safe side, you may also want to have the vehicle inspected by a qualified mechanic before returning it to the dealership to ensure that you have the best car to buy on a budget.

## 8. Check the record

If you’re buying a used car, one way you can slash your insurance costs is to choose a model with a good safety record and low theft rate. Insurance costs not only differ by model but also by location, so when you’ve shortlisted your to-buy vehicles, be sure to check their theft and safety records on the Net. Expand your search for these records not only locally, but internationally as well.

## 9. Don’t budge

You know what you can afford and you know what to buy. Don’t let the salesperson distract you into something else. You’ve invested a lot of time and energy on the cars on your list, so don’t veer away from the target. In addition, be sure to keep your monthly auto budget secret, as you could end up confusing the issue and revealing more than you should.

## 10. Prepare for the buying cycle

At this point, you should be done with your thorough evaluation of all the cars in your short list. You should also have a good idea of what you can afford. Most of all, you should be finished test-driving all your top choices.

Now, it’s time to choose the lone winner from your ‘best cars on a budget’ list and start making a deal. Whether you’re paying cash or financing, take a moment to take it all in and pat yourself on the back. You’ve done your responsibility to find the right car for your needs, now you can proceed with the buying cycle with utmost confidence.

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