While you might be looking forward to considering all the models and trim options available at your Chevrolet dealership, there’s one important thing you have to figure out before you can even start looking: your budget. Before you head to the dealership, learn the steps you need to take to set your budget for your next Chevy.
Determine Your Income and Expenses
The first step to setting your budget is finding out what your income and expenses are. To determine your income, simply look at your last few paycheck stubs and see what you take home after taxes. Your expenses will include items like mortgage or rent, utility bills, loan payments, and groceries. Once you’ve accounted for all of your regular expenses, add them up and subtract that number from your income. This tells you what you have available to put toward a monthly payment.
Don’t Get Focused on the Sticker Price
While the sticker price of the vehicle is important, you don’t want to focus solely on it because there’s more that goes into the total cost of your new vehicle than just the sticker price. You also need to include title and registration fees, sales tax, miscellaneous dealership fees, and optional items, like warranties.
Come Up With a Comfortable Monthly Payment
Chances are good you’ll be budgeting for a car loan. If so, you need to decide how much of your monthly income you want to go to your car loan payment. The general rule of thumb is that you should devote between 10 and 20 percent of your monthly income toward your new vehicle. Therefore, if you make $2,000 a month, you can allocate between $200 and $400 toward your monthly car payment.
If you have a lot of debt and don’t want to strain yourself, there’s another calculation you can use to determine how much monthly payment you can afford. For this calculation, add up all of your monthly debt. Then subtract that number from 36 percent of your monthly income. For example, if your income is $2,000 a month and you have $600 a month in regular debt, you can afford a monthly car payment of $120.
Provide a Sizeable Down Payment
A down payment is the initial amount of money you provide for your new vehicle. The larger you can make your down payment, the better, because your loan will cost you less over time. First, the more you can put down means the less you have to finance, which also means the fewer payments you’ll have to make.
Second, you’re likely to get a lower interest rate if you have a large down payment. Try to have 20 percent of the vehicle’s total cost as your down payment. Also, don’t forget you can trade in your old car and use that money as part of your down payment.
Once you follow these steps to discover what your budget is for your next Chevy, you can head to your dealership and find the perfect vehicle that you know you can afford.
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