College Ford Lincoln

For most of us, money is a limiting factor when it comes to buying a car. Knowing how much you can afford can be tricky. Whether you are planning for the future or need a new car tomorrow, here are some tips for determining how much you can spend.


At College Ford Lincoln, our team is here to help you. We want to make your car buying experience smooth and easy. Feel free to reach out to us with questions; our team is ready to serve.


Figuring out how much money you can afford to put into a car can seem daunting. While there is no single perfect solution, there are some things you can do to help get an answer.

1. Think About Your Budget

Most car buyers have to take out a loan to cover the cost. A loan requires you to make a monthly payment, and unfortunately, it comes with interest.


You can get a loan from:


    • A private bank or credit union

    • A dealership

    • A manufacturer


Wherever you decide to get a loan, the providers can be flexible about the monthly payment and loan duration. Be aware that the lower your monthly payment is, the longer it will take to pay off. The longer it takes, the more money you will spend on loan interest.


Look at how much money you make each month, subtracting your rent or mortgage, bills, grocery money, and any other known expenses. With what is left over, decide what the biggest payment you can make is each month.


A good rule of thumb is to spend 10-15% of the money you take home each month.

2. Think About Fuel and Insurance

If you have a daily commute or regular driving schedule, keep track of it. Write down how much you drive each week and then calculate it for the month. Take a look at what the prices of fuel are in your area.


When looking at cars, be sure to look at their fuel mileage. Using the fuel mileage provided, calculate how much it will cost you each month to drive the amount you do with the price of fuel. Rounding up a little gives you a wiggle room should the actual fuel efficiency be lower, or the cost of petrol go up.


If you currently own a car, talk to your insurance agent. Let them know you are planning on getting a new car and ask about how your insurance premiums will change. They might not be able to give you an answer until you know what make and model you are planning on getting, but they can provide some guidance.


Buying a car, even a used one, usually increases your monthly insurance premiums, so factor that in.


The amount you spend each month on fuel and insurance should add up to no more than 7% of your monthly take-home amount. That, combined with the car payment, should not be over 20%.

3. Think About Trading In

If you already own a vehicle, look up how much its trade-in value is worth. Even if it isn’t high, that is still less money out of your pocket. Knowing what your vehicle's trade-in value is before going to the dealership will help ensure you get a good deal.

4. Alternatives to a Brand-New Car

You may be dreaming of that new car smell, but remember you can get an air freshener for that. If buying a brand-new car seems too expensive, then it is.


Instead of going all-new, look into used cars or leasing. If you look at used cars, be sure to look at the vehicle’s history. If the price seems too good to be true, it is.

5. Be Realistic

Consider what you absolutely need to have, and what you simply want. You may be dying to have the extra-shiny wheels or immersive sound system, but if it puts you in debt for life, you will regret buying it.


Only look for vehicles in your price range and be firm with yourself.

6. Try an Online Calculator

There are tools available online that help you calculate how much car you can afford. These are just estimates, though. If the number seems high, then lower it. It is better to underestimate how much you can afford than to overestimate it.

7. Talk to The Dealer

Once you have an idea of the top amount you can spend, talk to a dealer before buying. Purchasing a car comes with fees and taxes. Ask your dealer what these are going to be. If all the extra costs combined with the total is above your monthly budget, find something else.


The team at College Ford Lincoln wants to help you get in the car you need and want. Give our Car Financing Calculator a try and then give us a call or come on in to talk about financing.


College Ford Lincoln