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The importance of knowing your budget before buying a car

When the time comes to buy a new or pre-owned car, there is a crucial steps that must be taken by all buyers before they visit their first dealership. That step is defining their budget based on the type of purchase they plan to make.


If you are paying cash, it is pretty straightforward. You want to set a maximum amount and then remember that there are quite a few fees that will be added to the price you see on an automakers website or in an advertisement. Therefore, if your maximum budget is $30,000, you can’t really look at vehicles that have an MSRP above $20,000.

If you plan to lease or finance, you need to set a budget for your monthly payment, but also for the amount of months you want to pay this payment. That is key because it is very easy for a dealership to lower the monthly payment by adding years to your finance or lease contract. You want to go into a dealership knowing that you do not want to pay more than, say, 500 $ a month, with no money down, for let’s say 60 months (five years).

Remember to leave enough financial leeway for maintenance, gas, insurance, and tires at the very minimum.

Thank you to Georgetown Volkswagen for their help with this article.

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