Financial Resource Center


Buy a Car You Can Afford

by Jorge Antezana-Pimentel / May 16th, 2020

Everyone would like to have a nice car that can last for years. However, before you buy, it's very important to assess your financial situation. You must be realistic about how much you can afford, look at various cars and offers, and be patient.

Your first step is to look at your budget and see how much you can afford on a monthly basis. For example, if you're making $3,000 a month and your current living expenses (rent, utilities, groceries, etc.) are already at $2,000, do you think you can afford a new $50,000 car with a monthly payment of $800? Perhaps you think you could, but consider this: Is it a good investment to sacrifice a large amount of your money for a car (asset) that will depreciate (loss value) 20% by the following year? A better choice might be to spend a third of that amount and save money for a down payment on a house that will increase in value over time.

Before you buy a car, take your time and do your research. Consider getting a used car with low mileage, that is still under warranty, and can last you for at least 7 years. Search for cars on websites like Carfax or Bluebook, which can help you find the right car based on your budget. Don’t buy the first one you like – wait until you have analyzed many different options before you make your final choice.

Be patient and think carefully when buying a car. Compare pricing, year, and models with other dealerships. Never go to a car dealership without doing the research or knowing how much you can comfortably pay per month.

Car buying can be a stressful process, but if you figure out your budget and get advice from the right sources, you'll be able to get a car that is affordable and reliable for many years. Again, the worst thing to do is to buy something new that may be great and luxurious but will hurt your wallet and your financial goals for the future. Choose your car wisely and you'll be able to enjoy it without going into too much debt.

(This article is also available in Spanish.)

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