How Much Car Can I Afford?

Buying a car is an exciting time, but for many people, finding the right car will depend largely on finances. Figuring out your finances and your price range is the crucial first step in the car-buying process, as it will determine what kind of car you will be able to afford. 

Depending on your financial situation, you may be able to buy a top-of-the-line new car, or you may want to consider taking out a loan on a used vehicle. However, understanding all of your options may feel confusing or overwhelming, especially for first-time car buyers.

If you're trying to understand the question: "How much car I can afford?" we'll go over how to determine your budget. We'll cover figuring out the right price range for your situation as well as some of your buying options, like leasing and loans. Additionally, you'll need to factor in other expenses when buying a car too, like insurance and other car-buying fees.

Figuring Out Your Price Range

Asking yourself, "How much car can I afford?" is an essential first step towards car ownership. A good rule of thumb is to calculate 10% of your take-home pay. This number is what you can reasonably expect to afford for monthly car payments. 

If you decide to go any higher than ten percent for monthly car payments, you'll risk being locked into an expensive loan that you can't afford. When this event happens, you might miss your monthly payments, which will damage your credit score. 

Down Payment

You'll also need to consider the down payment. If you can afford to pay a sizeable down payment, you may be able to afford a nicer model or lower monthly payments. Also, if you have an existing car to trade in, you'll be able to opt for a lower monthly payment. At Brickell Honda, we make the effort to clearly outline all of the lease terms and financing options upfront, so you can be sure that you are getting the deal that's right for you. We can also give you a fair cash offer on your trade-in car.

Loan Length

You'll be able to find car loans available in different lengths. However, most lenders offer loan agreements between 24 and 84 months. It's always best to try to pay off your loan sooner rather than later. Paying the loan off quickly will reduce the amount of interest you'll pay over time.

Other Expenses to Consider

If you're wondering, "How much car can I afford?" you'll need to consider the other expenses associated with having a car. Besides the down payment and monthly loan payments to consider, you'll also need to think about the other costs, like maintenance and insurance, that will arise with purchasing a car. You should always budget for gas, auto insurance, and other maintenance costs that occur regularly. Additionally, you will need to think about the costs associated with the purchase of the vehicle, like taxes and registration fees. 

Gas

Gas prices tend to fluctuate, but if you live in an area with a high cost of living, you should budget for the higher prices. You'll also need to consider how many miles you plan on driving every week or month to determine how much gas you'll need to budget for. 

Insurance

Insurance costs will vary depending on your driving history, the make and model of your car, and other factors. It's a good idea to shop around for the best insurance rates available to you. However, you should plan to budget for this coverage as all states require insurance. 

Maintenance costs

Depending on the type of car you purchase, you may have to budget for regular maintenance costs. An older, used car will likely have more maintenance issues than a brand-new one. However, buying a used car may still be the better option, especially if you opt for a reliable model in good condition.

Fees

There are some fees that will be due upon signing the contract for your new purchase. Typically, the most expensive cost that you should factor into your overall car budget is taxes. Depending on the state, you may have to pay thousands of dollars in taxes. Registration fees will also vary by state. 

Car Buying Options

There are a few different car-buying options that may suit your personal situation. Depending on your situation, you may decide to purchase or lease your car. However, with both options, you'll need to make sure that you can afford your monthly payments and all of the associated costs. You'll also need to make sure that your credit score is in top shape to get the best possible rates.

One of the most common options is to make a down payment on a car and receive a loan directly from the dealership. Going through the dealership financing will be easy and less hassle than searching for an external loan source. A lot of dealerships will offer competitive financing options, so you won't have to spend a lot of time and hassle finding the best loan option elsewhere. 

If you're asking yourself "How much car can I afford?" you should consider your down payment size, income, loan length, and the other monthly costs of owning a car. At Brickell Honda, you'll be able to apply for financing quickly and easily online, so you can figure out what kind of car you can afford. Whether you're looking for a reliable, modest used car or you are interested in one of the top-of-the-line current model year models, we offer competitive financing options. To see what your monthly car payments might look like with our financing options, fill out our online application.