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26 Mar 2019   /   0 comments

How to Budget For a Car


carsBuying a car is a big step in life. It’s always fun to picture yourself in your own brand-new car with the window rolled down.

A common mistake that people make is overpaying for a car because they went to buy without thinking how it fits into their future. When that happens, you risk missed payments which could lead to significant damage to your credit score or the repossession of your car.

At TFC Title Loans, we believe it’s our responsibility to advise you on how to budget a car.


Since 1994, we’ve been one of the leading loan lenders for Car Title Loans. From our personal relationships with our customers, we know that life can get stressful. To make one life decision easier, we want to help you budget for a car that fits into your lifestyle.

Where do you start?

Create a Household Budget

Before you commit to a car, you want to consider all the other expenses in your life. This includes your mortgage or rent, student loans, food, and personal spending. You want to look at your income versus your expenses. Base your income off what you take home after taxes, not your gross pay.

You also should think about how much you can afford and want to spend. If you want a brand-new car but realize you seem to be pushing your income, maybe think about things you’re okay with cutting from your spending: a vacation budget, entertainment, splurging.

Base Your Search

Once you’ve figured out how much you have for buying your car, search for the car that will fit that number. Make two lists of the wants and needs of your potential vehicle.

Some needs could include:

  • Number of passengers it can accommodate
  • Gas mileage
  • Transmission
  • Number of miles

Some things you might want in a car could be:

  • Leather seating
  • Satellite radio
  • Navigation system
  • Heated seating

If you find that you are having difficulty deciphering what you may or may not need in a car, think about the car as an appliance and not an investment. Some cars begin to lose their value the minute they’re driven off the lot. Think about the reason you are buying your car. Do you need it for transportation just to get from point A to point B? Is this a luxury car to drive down to the beach? Once you decipher your needs and wants, it will make searching for your car a lot cheaper and easier.

Getting an Auto Loan

If you’re planning on budgeting for a car, that means you plan to take out an auto loan. We advise that you shouldn’t plan on spending more than 15% of your monthly income on your monthly car loan payments. We consider that a generous amount.

Vehicle Insurance

To own a car, it’s safer and mostly required to have your car insured. There are many factors that determine what kind of coverage and liability is best for you. Think about who else will be driving your car, the places you are driving, how new/old the car is, the amount of traffic in your area, the weather, and other things that pertain to your lifestyle. Get different quotes from different websites and pick a range for which you want to budget your insurance cost.

The Down Payment

The larger the down payment is, the better it will be for you. It will cost you less in the long run because it will result in fewer total payments and you’ll get a better interest rate on your loan. It also means you own a greater share of the car. If you decide to refinance your loan through TFC Title Loans or sell your car, then owning a greater share of your car will be an advantage for you.

Even if you see an offer for “0% down!”, don’t let that fool you. We suggest that you try for a 20% down payment if you are able. Start to put some money aside as you decide when you’ll be ready to buy your car.

The Full Cost of a Car

While you budget for a car around your normal life, you should think about all the things that come with a car. You won’t have to worry about being unprepared or blindsided when you suddenly get another bill in the mail.

Here are some of the initial costs that occur when you first purchase your car:

  • Down payment
  • Tax
  • State fees (licensing, registration, title)
  • Dealership documentation fee
  • Other miscellaneous dealership fees (check with your preferred dealer)

After you’ve bought your car, you still have the monthly payments that come with some other recurring costs:

  • Monthly car payments
  • Car insurance
  • Gas
  • State registration renewal
  • Tax

Depending on where you live or what type of driver you are, you must be prepared for any other potential costs that could arise with your vehicle:

  • Parking
  • Traffic tickets
  • Car accidents
  • Maintenance (oil changes, tire rotations, fluids, part replacements)
  • Customizations

Car Title Loans and Refinancing with TFC Title Loans

After you have bought your car, keep TFC Title Loans in your mind. If you ever run into an emergency and need fast money, consider an auto title loan with TFC. If you eventually decide on an auto title loan with another lender and are not satisfied with your monthly payments, contact TFC and we can help you refinance your auto title loan to get a better deal. Feel free to contact us with any questions on Car Title Loans, when you can get an auto title loan, or how to refinance your current car to help pay for emergency expenses!


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