When people are shopping for a new car, they often first consider the type of vehicle they want and the amenities it should have. However, what many shoppers should weigh at the outset is how much they can afford. If the vehicle they want is out of their budget, it's wise to shop for a similar model by a different manufacturer or for an older model. Below, learn how you can decide how much you can afford to spend on a new car.

What Can You Afford?

If you intend to pay in full and upfront for the car, then you know exactly what you can afford. However, it gets trickier when you finance the purchase. You might be able to afford a huge car payment at this time, but it might not be wise in every situation. Many financial advisors recommend that you spend no more than 10% of your take-home pay on a car payment, and no more than 20% of it on all car expenses combined. This helps ensure you can continue to make the payments if other expenses should arise or if your income should drop sharply. Take a look at your current earnings, your monthly bills, and your rainy-day fund to see what you can set aside for car payments. 

It's important to remember that new cars depreciate dramatically as soon as they're driven off the lot, and you would not be able to command anything close to what you paid for it if you decide you must sell it.

What Other Costs Should You Consider?

You should be aware that a new car comes with numerous other charges. You must pay taxes on it, as well as transportation fees, insurance, and licensing and registration. Add the loan interest you will pay over the course of the year on top of that, and you may be surprised at the ultimate cost of the vehicle.

Moreover, high-end cars come with more expensive auto insurance. You won't have the option of dropping the coverage if it's too expensive if you've already financed the purchase. The lender will insist you buy full coverage for the entire length of the repayment period to protect their financial interest. If you don't, they'll put insurance on the car for you and add to your loan balance. This insurance does little to protect you, as it's geared toward making sure the lender gets their money back.

If you're in the market for a new car, stop by Kia Country of Savannah, the premier Kia dealership in Georgia. They serve buyers in and around Chatham County and are known for their friendly service and reasonable prices. They sell both new and certified pre-owned cars and provide convenient financing. Visit their website to browse through their inventory or call (912) 629-4906 to ask about their business hours.