Working a Car Payment into Your Monthly Budget

Even on a tight budget you can save for a down payment and acquire a new or used vehicle that’s affordable. The key is to know all the costs involved up front. Use a car loan calculator and contact your insurance provider to get an estimate of the monthly insurance premium in advance. Also, check with the motor vehicle office by going online to see additional costs like excise tax and fees associated with the registration and inspection.

A new car versus a used car

Deciding to purchase a new or pre-owned vehicle is something that you should take your time with and weigh the pros and cons carefully. If your budget doesn’t have room for a large car payment and your credit is less than good, you may be able to go with a car from a dealership fresh off a two-year lease. The value is less so the excise tax and registration will be more affordable. And a pre-leased vehicle generally has low mileage and gets returned in excellent condition so that the person who used it doesn’t have to pay additional fees. In a few years, you can use this same vehicle as the down payment and get into the new car you want without increasing your monthly expenses.

Saving and paying less

If your budget is tight, reducing your monthly expenses prior to taking on a car payment will make it easier. If you have an outstanding loan and a few credit cards, start to pay down the balances. This will make your monthly obligation less and free up additional monies for the new car. Start by taking the loan or credit card with the highest interest rate, the one that’s costing you the most each month, and focus on either significantly reducing the balance or bringing it down to zero. Then, once you have that one done, move onto the next one.

Ways to reduce your overhead

In addition to reducing your debt, you also need to change your spending habits. If you stop each morning for a coffee on the go and buy your lunch each day, limit it to once a week as a treat. The savings from these two items alone can free up a hundred or several hundred depending on how much you currently spend each day. The money you save, you can use to pay down your debt faster. Once you start doing this you’ll find that you think long and hard before spending money on the go.

Other ways to save

When was the last time you really looked at what you are spending each month for your cable and your cell phone? Chances are you simply pay the bill without giving it a second look. Instead, open the bill and check for things like usage fees on your phone. If you find that you have minutes left over each month contact your carrier and try to move to another plan. Or, better yet, shop around and check the rates of other companies and promotions that are available. The same goes with your cable bill. Do you really need all those channels?  Take advantage of the open market and shop around for your cable service at least once a year.

Buying a new or used vehicle is exciting. You can eliminate the stress by knowing in advance what your payment is and the fees that come along with it. By freeing up room in your budget and saving for the down payment you’ll get into a new car without sacrificing on quality and without breaking the bank.

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