How Much Car Can You Afford?

How To Determine the Cost of Vehicle Ownership

Aside from your home, there aren’t many things you’ll spend more money on than a vehicle. That’s why it’s a huge decision to buy a car. You’ll probably use it almost every day, so not only does it need to provide all the right features and capabilities, but it must be something you can afford. The last thing you want to do is end up with a monthly payment that stretches you too much and doesn’t leave room for other necessities.

Fortunately, buying a vehicle doesn’t have to be guesswork. You can shop with confidence and have financial peace of mind when you bring home your next model. Certain factors play a key role in figuring out how much your vehicle will cost. You can learn about these and understand them. Then, come to Dennis Dillon Mazda in Boise, ID, so you can take a look at vehicles in your price range.

5 Factors That Determine the Total Cost of Owning a Vehicle

While the sticker price is the primary consideration, there are other factors you need to think about when shopping for a new vehicle. These include the following:

1. Fuel – If you purchase an electric car, you won’t have to worry about stopping at the gas station to fill it with fuel. However, more cars still have gas-powered engines, so you need to think about how much you’ll spend each month on fuel. Look for vehicles with good fuel economy — those that can go farther on a single tank of gas. Consider your driving habits, including how far and how frequently you travel.
2. Taxes and Fees – Before you drive home your vehicle, there are some initial costs to keep in mind. The dealer may have fees, and there may also be documentation fees and transport fees. You’ll need to register your vehicle and renew it annually. Like anything else you would buy, vehicles have sales tax included in the purchase. In Idaho, the sales tax rate on cars is 6% of the purchase price.
3. Maintenance and Repairs – To keep your car in good condition and running smoothly, you need to keep up with regular maintenance. Doing this will also extend its life and help its resale value. You should also make repairs as soon as possible and not put them off. These costs, however, can add up. On average, people spend about $800 a year on car service.
4. Interest on Financing – When you get a car loan, it will include a term—the length of time you will make payments—and interest rate. It’s good to compare auto loan rates so you are getting the best deal possible.

Determining Your Monthly Transportation Budget

When you buy a car, stick to a budget and be cautious about how much you spend. You’ll need to factor in your car insurance as well as fuel costs and maintenance when you make this budget. Try to keep your vehicle costs, including the monthly payment if you do auto finance, at about 15% of your total expenses.

Calculating How Much You Can Afford for a Car

Shopping for a vehicle can be exciting, but it’s crucial to look for models that suit your needs, not just those that have the latest features. You can start by using an online prequalification tool. This resource allows you to input your monthly income and other obligations. The tool will then assess your credit score and qualify you for a certain price range. Instead of shopping at the top end of this range, try to be more conservative, so you have some breathing room in your budget. Making a larger auto loan down payment will also lower your monthly car loan payment.

How to Calculate the Cost of Fuel

• Calculate Monthly Distance – Decide how much you typically drive each month in miles.
• Calculate Gallons Used – Budget how much gas your car uses by looking at the miles per gallon.
• Calculate Total Cost of Fuel – Evaluate the current cost of gas so you can estimate your fuel costs. For some wiggle room in your budget, add a dollar per gallon to the current cost and multiply this by how large your vehicle’s gas tank is.

Find an Affordable Car at Dennis Dillon Mazda

At Dennis Dillon Mazda in Boise, ID, we have a variety of vehicles to choose from. Come to the dealership knowing how much car you can afford so we can narrow down your search. Stop by today and let our sales team guide you through the buying process.