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Practical Money Matters Radio Series

August 22, 2011
Can You Afford a New Car?


Before you hit the car lots, calculate the real costs of the vehicle you are considering and evaluate whether it is really in your budget.

Transcript

Many people who buy new cars get loans--often taking four or more years to pay them off. Before racking up that kind of long-term debt, remember:

The longer the loan term, the more you'll ultimately pay in interest. So, the larger your down payment and shorter the term, the better. New cars typically lose 20 percent or more in value the minute you drive off the lot.

When figuring out how much car you can afford, don't forget to calculate the down payment, insurance, tax, registration, fees, gas, maintenance and repairs – together, these expenses can cost thousands. And, when comparing different models, check how much insurance will cost for each–it can vary widely.

Bottom line: Crunch the numbers before committing to a new car.


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