How to Budget for a New Car
When purchasing a new car, the sticker price is just one of your expenses. Whether you’re financing or paying cash, other costs come with buying a car. Keeping this in mind can help you budget effectively and save money before visiting the dealership. This guide will give you an overview of how to budget for a new car so that you aren’t surprised by the cost of ownership when the time comes to sign those papers. Read on to learn more!
1. Be Aware of Dealer Fees
When looking at the cost of a new car, ensure you include all of your expenses. One fee that many people don’t account for is the dealer fee. When you buy a new car from a dealership, you’ll often be charged a fee for the dealer to process the paperwork. Jonathan Osler San Francisco writes, “Dealerships charge a fee to process the paperwork, register your new car, and handle all the records.” This fee can be anywhere from $200 to $500. In addition, you may have to pay for an emissions test and a safety inspection. These fees can add up quickly and lead to unexpected costs when buying a new car.
2. Be Aware of Taxes
When you buy a car, you’ll also have to pay taxes on it. Your state and the federal government will both tax you on the purchase. The amount of tax you pay depends on your income and the value of your car. In some cases, you’ll be taxed based on what your car is worth at the time of purchase. For example, if you buy a new car for $20,000, you may only have to pay taxes on $10,000. If your vehicle is worth $20,000 when you buy it but is now worth $30,000 when you sell it, you’ll have to pay taxes on everything in between, which can be a significant amount.
3. Research Your New Car
Before you head to the dealership, research your new car. Make sure you know what features you want and which models have them. Knowing what you want before you step onto the lot is essential because it helps you understand what to look for and avoid. Remember that features that come standard on one car might be an optional features on another. While it might not seem like a big deal now, it can save you money in the long run. For example, if one car comes with a keyless entry but the other doesn’t, you can add it to the other vehicle for a cost. When you know what features you want, you can also research how much they cost. This will help you determine how much you can afford to spend on a new car.
4. Estimate the Cost of Maintenance
Another cost to consider when budgeting for a new car is maintenance. When you own a car, you’ll have to do regular maintenance to keep it healthy and running smoothly. This can be costly, especially over the lifetime of your car. Depending on your car type, routine maintenance can cost between $200 and $1,000 per year.
If you want to drive off in a new car, you’ll need to budget for it. When you’re planning your budget, remember that there are a lot of different expenses that come with buying a new car. Jonathan Osler San Francisco works with people in their twenties and thirties to help them buy a car. He says that the most important thing you can do is know what you want before shopping.