How to buy a car

Because you don't want to be the 45 year old dragging your father out to do your car negotiating for you. Or a 70 year bringing your son- here is how to buy a car.
1. Figure out your monthly payment from your budget. Use the internet to figure this out. If you do not budget, don't buy a car.
2. Multiply your payment by your maximum term. Do you want special financing rates? Those generally max out at 60 months. 72 months is common but stretching the value. Looking at used only? How long your term can be depends on a combination of the year of the vehicle and the mileage.
Example: I can afford $200 a month payment for 72 months= I am paying $14,400 with tax and interest.   200X72= 14,400
3. Realize that this amount isn't going to get you very much car. Weigh your options-
a- lease!- I will write a separate post about how nice leasing is.
b. up your budget.
c. settle
4. Okay lets use a reasonable amount now- $350 X 72= $25,000- (I took some off for fees) again with tax and interest.
So how much can the VEHICLE cost?
EX. Total amount- tax= Cost X 1- tax rate= 25,000 X 1-.07= 25,000 X .93= $23,250.
- Interest rate
5. Interest? I can always get 0% financing.

No you can't. Really. Lets plan for 2%

On $20,000 of vehicle you are looking at around $2,000 of interest. Just go with it. The formula is complicated.

So moral of the story is really for a $250 payment you should be looking at cars right around $20,000.


6.Now you get to do some research! What kind of vehicles are in this price range?
Sticking with the $250 payment- small cars or used. Were you hoping for more? Lots of options?
Now again you have the option to increase your budget or settle.

Serious research questions-
A. Reliability and cost of ownership- What are the real costs of service?
B. How long are you planning on keeping this vehicle?
C. Capability- Do you live in snowy CT or bone dry AZ?

Now I am going to divide this into 2 more blog posts- NEW purchases vs. USED purchasing tips