By Philip Bachman
Have you been thinking about a new set of wheels? Shopping for a car can be fun. It is exciting to explore a new vehicle’s good looks, color choices, and fancy features. However, the process of car shopping can also raise financial anxiety.
Common knowledge from years ago held that a car was the average American’s most expensive purchase besides a house. This day in age, a car remains most folks’ most expensive purchase, not including their house and perhaps college tuition. Thus, it is important to weigh certain financial considerations before and during the car shopping process.
Today’s article will discuss an important first question: “How much car should I buy?”
So you’re deciding which car to trade up to – or perhaps which car to buy as an additional vehicle for your household. Non-financial considerations like “sedan or SUV” and “brilliant black or deep cherry red” usually come to mind first. Money matters should be considered during this stage also.
The question of how much you ultimately spend on a car will be answered by what price range you shop within – and whether you stay true to your price range. Although it is fun to daydream about luxury cars with bells and whistles, try not to become emotionally attached to an expensive car before setting a budget. Instead, set a “hard” maximum price limit for your new or used car search before shopping in earnest.
Remember to factor in a dealership’s admin/documentation fee, if any; just over 7% sales tax in Tennessee on the sales price after any trade-in allowance; and potentially higher auto insurance payments. Approach the process as your budget guiding you, not restraining you. There are so many choices of vehicles out there, after all, that setting a budget at the beginning can actually make the car shopping process easier!
Everyone’s situation is unique about how much car they can comfortably afford. As with other big-ticket items, shopping for a car can be less overwhelming if you approach it as financially objectively as possible, despite the joy of taking to the open road in a new ride.
This article is Part 1 in a multi-part series. Stay tuned throughout the spring and summer for more blog insights about car shopping.
