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As you consider buying a new car, you need to know how to determine your car budget so you can make the smart choice financially. Many people look at cars and their features and then make a selection based on what they want, without giving careful consideration to the overall cost. However, it’s important to ask yourself, “Can I afford a new vehicle?” Learning the factors that affect your current car value will help you decide if the car you want is right for you.

Can I afford a new vehicle?

How Much Is Your Current Car Worth?

If you’re counting on using your current car toward lowering the cost of your new car, it’s important to gain a full understanding of how much it will be worth. Many car owners have an over-inflated view of how much their car is really worth and how much they can expect to be offered as a trade-in. There are tools online that can help you gauge the value, but it’s always best to err on the low side to avoid inflating your expectations.

Sources for Financing Your Next Car Purchase

Another important consideration is how you intend to finance your next purchase. Few people can buy a new car outright and therefore need to finance. There are many options that allow you to get the funds you need to cover your vehicle, but some of them come with large fees and high interest rates. For this reason, it’s important to look closely at the details of the financing so you can make the right choices to keep the overall costs of buying the vehicle down.

Do you know how to determine your car budget?

The Costs Associated with a New Car

In addition to the sources for financing your next car purchase and the factors that affect your current car value, it’s important to look at the cost of the car and how it breaks down each month. However, it’s not just the car payments you need to think about. You also need to consider the cost of insuring a newer car versus a used one. Talk to your insurance agent before you go car shopping to find out how much extra you could pay based on the makes and models you are considering for your new purchase.

If you’ve ever wondered, “Can I afford a new vehicle?” you may not have considered all the factors needed. In addition to the MSRP cost of the vehicle, there are other things to consider to help determine the affordability of a particular vehicle. This includes understanding the value of your trade-in, the source of the financing and the other costs that are associated with buying new.

If you’re trying to determine if you can afford that new vehicle you want, contact us. We can provide the assistance you need to weigh the pros and cons of buying new versus used.

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Bill DeBoer

Written by Bill DeBoer

William J. DeBoer (Bill Jr.) is Co-owner and Vice President at DeBoer’s Auto. As the company’s General Manager, Bill has been responsible for bringing innovations in daily operations to the full-service, high-tech auto repair facility for 20+ years. Passionate about computers from an early age, Bill’s interest in technology gravitated to cars while he was in college. By obtaining a Certificate in Automotive Technology followed by a B.S. in Business Management from Penn State, Bill was able to fuse his interests into a car technology specialization and join the family business shortly thereafter.