By the Numbers: Can You Afford a New Car?

It’s always in the back of your mind that you’d like a better car. A newer car. A shinier car. A bigger car. A faster car! But, it’s always going to come back to – can you afford it? And many people will make that decision based on a gut instinct, and it will come back to bite them in the form of nasty car payments for an extended period of time.

So that begs the question – how do you find out if you can afford a new car, strictly by looking at the numbers? You can find out your car’s value, think about why you should buy cheap in the first place, ask yourself about hidden costs, consider new expenses in your future, and determine the accuracy of your current budget. If you go through all of things, you’ll be able to tell if you can afford a new vehicle.

What’s Your Current Car’s Value?

Before you look into buying a new ride, find out what your current car’s value is. You’ll at least have a starting point in terms of trade-in value, and you’ll also know what number you have to move up for to ‘improve’ your standard of living. Without a basic understanding of your car’s current price point, you’ll essentially be flying blind if you have to talk to a car salesman as well.

Are You Familiar With Reasons for Buying Cheap?

Many happy, successful people buy cars as cheaply as they can. The reasons for this are because if a vehicle has four wheels and an engine, it can get you where you’re going. Anything beyond that is icing on the cake, and it’s also expensive icing. So before considering whether you can afford a new car financially with respect to your car budget, think about putting that money into a topic other than transportation, just for curiosity sake.

What Are the Hidden Costs?

Are you aware of the hidden costs of a car? There’s insurance, gas, maintenance, and a host of other considerations. When you’re deciding if you can buy a new car or not, you’re not just deciding about the initial price. You’ll also deciding if you can handle everything else that changes with a new vehicle as well.

Are There New Expenses In Your Future?

If you’re going to have a new addition to your family, or plan on going to school, or even plan on moving to a new location where life is more expensive, then you should hold off on purchasing a new vehicle, because there’s no way to tell in advance if you can afford it or not.

How Accurate Is Your Current Budget?

And finally, if you don’t have an accurate budget, there will be no way to tell if you can afford a car, or anything else for that matter. So before you look at that shiny new convertible, make sure that you understand your basic income and expense report first.