Choosing a Budget for Your New Car

Buying a car is a big investment and can be long-term depending on how you finance it. So choosing the right budget is important. There are a lot of things you should factor into your budget for a new car. You have to be realistic about what you can afford to help you avoid paying too much that will get you into financial trouble.

Start by figuring out what your monthly income and expenses are. Figure your income by using your net (after taxes) income. Normally they say you shouldn't spend more than 15% of your monthly income on your car payments. Don't forget to account for the full cost of the car including taxes, gas, insurance, maintenance, registration, etc.

Under no circumstances should you purchase a car that you can't afford. This can cause you to miss payments and even get the car repossessed, which can cause a major amount of damage to your credit.

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