Calculating A Budget For Your New Vehicle in Omaha, NE

How Much Car Can You Afford?

Many people desire to buy the latest car model with all the fancy features, but there may be more affordable options. It can be a struggle when deciding between luxurious car features, such as massaging front seats, and essential household expenses, such as buying a new refrigerator. It is essential to understand the overall cost of owning a vehicle and how it will fit into your budget. This helps us find a balance between our wants and needs.

5 Factors That Determine the Total Cost of Owning a Vehicle?

The price of buying a vehicle is only a small part of the total cost of ownership, as other factors also contribute to the overall expense.

1. Interest on Financing: If you finance the purchase of your vehicle, the interest will accrue and increase the total cost.
2. Fuel: Fuel costs depend on the vehicle type and the distance driven.
3. Maintenance and Repairs: Regular maintenance and repairs are necessary despite careful handling, and these costs contribute to the total cost of owning a vehicle.
4. Taxes and Fees: Consider additional expenses such as sales taxes, registration fees, and insurance premiums.
5. Depreciation: When a new vehicle is driven off the dealership lot, its value begins to decrease due to depreciation; even though it doesn’t directly impact your immediate out-of-pocket expenses, it’s important to consider.

Determining Your Monthly Transportation Budget

Financial experts recommend that 10% to 15% of monthly take-home income should be allotted for transportation expenses, including car payments, insurance, and fuel maintenance. If your monthly income is $5,000 after taxes and health insurance deductions, your transportation budget should be between $500 and $750.

Calculating How Much You Can Afford for A Car Payment

When you have a short list of vehicles, calculate fuel, insurance, and maintenance costs. Deduct these expenses from your transportation budget to determine your monthly car payment limit.

The American Automobile Association recommends budgeting $50 a month, or $600 to $700 annually, for car maintenance. It may be wise to allocate $75 monthly for inflation and unforeseen repairs. Obtaining a quote from your chosen insurance provider will help you factor in the essential expense of insurance costs.

Here is a simple process to help you calculate your monthly fuel cost:

1. Calculate Monthly Distance: Multiply your daily mileage by 30 to calculate your total monthly distance.
2. Calculate Gallons Used: Find the number of gallons of gas you consume monthly by dividing the total distance by your vehicle's MPG.
3. Calculate Total Cost: Multiply the total number of gallons by the current price per gallon plus one dollar to account for potential fluctuations in fuel prices.

Find an Affordable Car at O’Daniel Honda

Deciding on a vehicle within your budget has long-term financial implications. Refer to the guidelines provided to calculate the overall expense of owning a car and determine a monthly payment that fits your budget. Visit O’Daniel Honda for a vast selection of new and used vehicles. Our expert team will help you find your ideal vehicle that meets your needs and budget.