Shopping for new cars can be an exciting venture, but it’s also easy to get carried away with your dreams. To avoid biting off more than you can chew financially, it’s wise to plan out what you can afford in a new vehicle. This means figuring out how much you can handle in monthly payments as well as ensuring you have enough for upfront costs. Here’s a closer look at how to come up with a ballpark figure.

How Much Car Can You Really Afford?

Before you start looking at cars for sale, one handy trick is the 20/4/10 rule, which means paying 20% of the vehicle’s sticker price as the down payment and financing the remainder of the cost with a 4-year loan. Finally, your total monthly cost for the car should total no more than 10% of your monthly income, including the car loan payment, insurance, fuel, and upkeep. If you can’t abide by these terms, you should consider taking your budget down a notch.

Though you can take out a longer loan of up to seven years, which will help keep your monthly vehicle expenses down below that 10% limit, keep in mind that this means you’ll eventually be paying on the vehicle after it’s past its prime.

How to Calculate the Hidden Expenses 

Whether you’re buying a new or used car, you’ll have to consider more than the sticker price. These hidden costs will increase the amount you’ll need at signing.

The government charges fees and taxes on each new vehicle purchase. Typically, the total amount due is paid as the vehicle’s registration fee and, from there, the DMV distributes the fees to the various government agencies. If the dealer pays the registration and taxes as a part of the purchase process, you should expect to see that included along with the dealer’s service fee as a part of your total vehicle cost.

The friendly sales staff at McGraw-Webb Chevrolet Inc. will help you find the perfect new car with financing terms that will give you peace of mind. They proudly serve residents of Camden, AL, and the surrounding area with new and used vehicle sales with a full service and parts department. To contact a sales agent, visit their website or call (334) 682-4258 today.