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Buying A Car On A Budget

Value is important now more than ever and if you’re in need of transportation, buying a car on a budget is a must. There are several factors that must be considered before any large purchase, but vehicles often come with additional expenses you may not be aware of prior to buying.


The first step in buying a car on a budget is to figure out what you can afford. Vehicle cost aside, you have to figure in maintenance expenses (oil changes), possible future larger repair costs (tires), insurance expenses, and even how much you’ll spend on gas. 

For general maintenance, AAA estimates budgeting around $100 per month. This includes oil changes and tire rotations and allows for a cushion for future unexpected expenses. If you purchase a vehicle that comes without a warranty, its a good idea to set aside more savings in case of a major repair being needed – like a transmission or engine replacement.

Monthly fuel expenses (if you don’t already have a rough estimate) can be averaged by dividing the number of miles you drive in a given month by your vehicle’s fuel economy rating, then multiply that number by the price of gas per gallon in your area. The US Department of Energy has a wonderful website where you can find and compare these ratings for different vehicles. 

After you’ve made your calculations, the general rule is not to spend more than 20 percent of your monthly income (after taxes) on a vehicle. 


All vehicles depreciate in value, but depreciation occurs much faster with a brand new car than a used vehicle. Because of this, purchasing a used vehicle is optimal if you’re trying to buy a car on a budget. You’ll get better value off of the lot and more bang for your buck if you purchase a preowned vehicle.

But just because a car is used doesn’t mean it isn’t reliable. Nowadays you have several options when shopping for a used vehicle. Many reputable dealerships and manufacturers offer certified preowned programs. These vehicles have to meet certain standards before they can be sold. All maintenance must be done (and generally records of all maintenance are included with the purchase) and the car must pass a multipoint inspection.

Also, by shopping dealerships, you can find some great vehicles that have just come in off leases. Most lease trades are around 3 years old and generally have a fraction of the mileage of your average used car. By purchasing a vehicle that was traded in after a lease you’re getting a reliable car and the original buyer ate the depreciation.

A line of used cars parked in a row on a dealer lot.


In-house finance dealers (AKA buy-here-pay-here) are everywhere. They offer a selection of vehicles and a simple purchase process – but aren’t usually the best option for people looking to buy on a budget.

Many times the selection of vehicles on these smaller lots are small, prices are inflated, and smaller budget lots usually feature cars without a warranty that have high mileage. Also, since finance is handled by the dealer, you may get stuck with a weekly or bi-weekly payment that has to be made in person.

If you are buying a car on a budget, it’s best to shop at a reputable larger dealership.



Before you make a vehicle purchase, it’s always important to identify your specific transportation needs. By figuring out the number of passengers you’ll need to carry, how much trunk or cargo space you need, how many miles you’ll be driving on average, and what optional features are important (hybrid, heated seats, backup camera) will help you narrow down what vehicle will best suit you.

After you’ve made your list of requirements, you can then begin researching different makes and models to see which vehicle would be best.



Before you sign the papers and take delivery of your new vehicle, it’s important to become as informed as possible. This means asking for a vehicle history report like CarFax or AutoCheck. These reports will show you who’s owned the vehicle prior, if it has been involved in any serious accidents, and will ensure you’re knowledgeable as to the history of the car.

Finding out if the vehicle has any recalls is a must. Service records will show what recall repairs have already been completed, but the National Highway Traffic Safety Administration (NHTSA) offers an online tool where you can enter the vehicle’s VIN number and see if it has any outstanding recalls. 

It’s also a good idea to ask the dealership for an inspection report, especially if the vehicle isn’t certified preowned. Things like tire wear, brake life, defective bulbs, fluid leaks, and even major issues like strut repair will be listed in a comprehensive inspection report. Even if the dealership provides their own, you can (and should) ask to have a pre-purchase inspection from another licensed mechanic.

If you’re buying a car on a budget it is essential that you know exactly what you’re purchasing.



It is possible to purchase a great vehicle and not blow your budget, but you must do your homework if you’re looking for reliability. Figure out what you can spend, identify your specific transportation needs, avoid depreciation by purchasing a preowned vehicle, and do your research before you sign on the dotted line. 

Buying a car on a budget makes smart financial sense and by following some simple steps you can ensure years of reliability out of your next vehicle purchase.