How to Build a Used Car Budget

When you’re getting started on buying a used car, the first thing you’ll need to do is build your budget. So, where do you start? Let’s go over a few tips!

1. Value Your Trade

Trading in your current ride for a different one? Then you’ll want to get the estimated value of your car to better build out your budget. There are a lot of tools you can use to determine a rough estimate of your car, or you can stop by our dealership to have someone inspect your vehicle and make a firm and fair offer.

2. Do the Math

Many experts believe your car payment should not exceed 15 percent of your monthly income. This number will change for everyone, and you may actually be more comfortable with a lower percentage depending on what other bills you have. Explorer a few options to see what you feel the best about.

3. Add In Your Extra Expenses

When building your used car budget, you don’t want to forget about all the other expenses that come with owning a vehicle. From monthly gas expenses to insurance and routine or unplanned maintenance, you’ll want to ensure you leave room in your budget for these extras.

4. Figure Out the Right Down Payment for You

Down payment plays a large role in your monthly rate, so be sure to find the best down payment amount for you.

Determining Down Payment

As we just mentioned, down payment plays a large role in financing, and the right down payment amount changes for each driver. Typically, people opt for 20 percent down. However, this number may not work for everyone.

The more you put down, the lesser your monthly rate will be. So, if you can budget for a larger monthly expense, you can opt for a smaller down payment. Explore all your options, and look at your rates with various down payment amounts to ensure you’re making the right decision for you.

Financing for First-Time Buyers

Buying a car for the first time? Choosing a used car is a great idea, but there are some financing factors you’ll want to be aware of. For starters, you’ll want to learn your credit score right away. Since you don’t currently own a car there’s a chance that your score is lower due to lack of credit history.

This is totally normal and it’s good to learn your score early in the car-buying process, so you can make changes to build more credit and raise your score before securing a loan.

Certain drivers may even want to consider a co-signer if there is a family member you trust.