Step One: Know Your Budget
The first thing our Hudson, OH customers will want to do when
they start thinking about their next vehicle is determine how much they
can afford. The issues of people falling behind with their monthly
payment is often the result of someone purchasing a vehicle that they
can’t afford. There is an easy guideline to use when trying to
determine how much you can afford. The 20/4/10 guideline is used by
many financial experts to give consumers an idea on which vehicles they
should be considering by giving them an idea of a price range.
Our New Franklin, OH customers should expect to put down 20
percent of the vehicle’s purchase price in trade equity or cash. If
possible, they should not finance any longer than four years and their
vehicle payment, which includes interest, principal, and insurance,
should not be more than 10 percent of your gross income. This 20/4/10
guideline is not a steadfast rule, but one that can help ensure the
success of paying back your automotive loan.
Step Two: Don’t Forget the Additional Costs of Vehicle Ownership
One thing many customers forget when they budget the cost of
their next vehicle is the additional expenses that come with owning a
vehicle. Customers can save themselves a lot of money by shopping for
insurance and getting quotes on the vehicle they are considering before
they make the purchase. There are several factors that go into
determining the cost of your insurance, but one of them is the type of
vehicle you choose. If the insurance company’s data shows that the
vehicle you are purchasing gets into more accidents, there is a strong
probability that your insurance cost may increase over what you are
currently paying and that could seriously impact your budget.
Another additional costs that some customers forget are
fuel expenses. If you have been driving a fuel-efficient sedan for the
past five years and now you are considering a truck, your fuel expenses
will increase. This will impact your budget as will the cost of any
routine maintenance and repair. If you are thinking about going with a
luxury vehicle, some of the routine maintenance may be more expensive
than if you went with a comparable vehicle in the non-luxury
segment.
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