When you’re ready to go car shopping to purchase a new or used vehicle, the first and one of the most important steps is to determine your budget. Whether you’re a seasoned car shopper or a first time car buyer in Richmond or Ashland, knowing and sticking to a budget ensures that your monthly finances won’t be negatively affected by a car payment that becomes unaffordable. Whitten Brothers Automotive is here to offer advice on how to budget for your total monthly car costs.
Figuring out your car shopping budget is similar to figuring out your budget for anything else. You’ll want to look at all of your current expenses and subtract that amount from your monthly income. Car shoppers who don’t have a zero-sum budget and there’s money left, allocate it toward your monthly car costs. If there isn’t extra money left in your budget, you’ll need to determine where you can reallocate funds from other areas of your spending.
If you currently drive a vehicle, you can use the same estimated monthly amount as your budgeted amount for your next new or used car, truck, SUV, or van.
A study from NerdWallet found that one in four drivers are worried about how fueling or charging their vehicle may impact their budget for other necessities. This is partly because purchasing your new or used vehicle and planning for monthly auto loan or lease payments is only part of the equation. It’s to focus your budgeting on the monthly payments, taxes, and registration. But there’s more to the cost of car ownership.
In addition to the “out-the-door” price and monthly car loan or lease payments, you should also factor the following into your monthly or yearly budget:
Car insurance: You need car insurance to legally drive a new or used vehicle. You can’t buy a vehicle from a dealership without it! You can get quotes from different car insurance companies to help you find the best and most cost-efficient option for your needs. Once you know what your monthly car insurance payment will be, it’s easy to factor that into your overall monthly car budget.
Gas or electricity: If you plan to buy or lease a gas-powered vehicle, you can estimate your monthly cost using current gas prices, the vehicle’s EPA-estimated fuel efficiency, and your estimated monthly driving mileage. For example, your vehicle gets approximately 26 mpg, you drive an estimated 1,200 miles per month, and the average cost of gas is $3.20 per gallon. Your estimated monthly budget for gas would be around $150.
According to Kelley Blue Book, most vehicle charging is done at home overnight with a level 1 charger, which is the most affordable way to charge an electric or electrified vehicle. The average cost of residential electricity in Virginia is 14.46 cents/kWh. The average daily cost to charge a smaller car battery is $5.64, an average car battery is $10.56, and a larger car battery is $15.47.
Maintenance: Regular automotive maintenance is important to keep your used or new SUV, van, car, or truck running as it should for as long as you drive it. Car services like oil changes, filter changes, tire rotations, fluid checks, and battery inspections are fairly inexpensive and may be covered by a warranty if you have one. Keeping up with routine car care also helps prevent bigger, more costly issues down the line. Many automakers offer specific service schedules for their vehicles.
As part of the research phase of car shopping, look into what vehicles are the most affordable to maintain. For example, Mazda vehicles are known for their lower annual maintenance costs.
Car washes and upkeep: Getting occasional car washes or getting your vehicle detailed don’t seem like a big deal, and they’re not really. That said, there are added costs that can affect your overall budget. You can account for vehicle upkeep with a monthly estimate. To save money during nicer weather, you can opt to wash the exterior of your car and vacuum the interior at home.
Parking: If you live or work somewhere that requires a parking pass, be sure to include that in your overall monthly car costs as well. If it’s an annual payment, divide the total into what the monthly payment is for your budget.
If you currently drive a vehicle and plan to trade it in, you can get your Kelley Blue Book trade-in value online. That value can be used as a down payment or to offset the monthly auto loan or lease payments. This can help lower your monthly car costs. You can also make a downpayment on your car lease or loan to reduce your monthly payments.
Whitten Brothers Automotive has long-standing relationships with several financial institutions, including both banks and credit unions. Once you’ve submitted your pre-approval application or applied in person for automotive financing, we work with lenders to find the best possible loan or lease terms and rates available to you. Not only does this streamline the buying process, but it also saves you from having to contact each individual bank or credit union to get quotes yourself.
Something to note about leasing a car is that the lease terms are often all within the manufacturer’s warranty period. This means that routine car services and maintenance will likely be covered under the warranty. This is also true if you purchase a new vehicle with a warranty or buy a warranty for your used vehicle.
As we noted above, shop around for car insurance before making a decision. This helps you get a better idea of what sort of coverage each company offers for the cost. If you don’t drive frequently, some insurance companies have pay-per-mile car insurance that may be more affordable than a traditional plan.
Whitten Brothers Automotive is a top new and used car dealership with showrooms in Richmond, VA, and Ashland, VA. We have a large inventory of new vehicles from Mazda, Chrysler, Dodge, Jeep, and RAM and a great selection of used vehicles from these and other popular automakers. Once you’ve determined your budget and estimated your total monthly car budget, visit one of our showrooms to explore our inventory in person. Our Sales Advocates and auto finance team are here to answer any questions you have and guide you through the car shopping process. Contact us to get started!