There are few projects that you will undertake that will be more costly than buying a car. According to the FTC the purchase of a car is the second most costly financial activity that you will undertake, and it falls just behind buying a home. The average cost of a new car is around $30,000. That's a big investment for anyone considering buying their first car. To simplify the process we’ve put together a basic primer on what you need to know when purchasing a car for the first time.
First things first, whenever you’re taking on a big financial project you need to start by assessing just how much you can afford. Ideally it would make sense to use mostly cash to purchase a new car, but since the cost of a new or new-to-you car can be so high, it makes sense to look toward financing. To set a budget take into account your monthly expenses, things like your cell phone bill, housing costs, groceries, gym memberships, savings, and health insurance. Get a clear picture of what you have to outlay each month when you are just living day to day. Also include any amount you want to save for other projects (like buying a house). Once you have your monthly expenses, subtract the amount you spend from the amount you earn each month, and the remaining money can be spent on a car. Remember when you are budgeting for a car you’ll not only need to include the monthly payment but also the insurance, gas, and any kind of maintenance you may need to do to keep your car running. If you want to learn more about how to figure out your car budget, check out our recent story.
Digital media content producer/consultant & former CNN senior producer, now running CN'TRL : Cars, Tech, Real Estate & Luxury.