First car · Part 1 of 4
Set a monthly budget for your first car
Add the payment, insurance, fuel, and upkeep to see what fits after other bills.
Start with what is left
Start with take-home pay, then subtract bills and planned savings. Use the remaining amount to compare the full monthly cost of a car.
Know what belongs in the car cost
Get an insurance quote for the car you want. Add fuel for your commute, maintenance, and registration. A loan payment alone is not the monthly cost.
Source: CFPB: Budgeting for an auto loan
See what a full month looks like
Here is how those costs fit together in one month.
Check your monthly room
Example month
$3,400 take-home − $2,345 bills
− $742 for the car
$313 left per month
That remainder has to cover surprises. Decide whether it is enough before choosing a car price.
Choose a price before a dealer chooses a payment
If the amount left does not cover irregular costs or repairs, compare a lower price or save more before buying.
Shop with a maximum full monthly cost. Ask for the out-the-door price in writing, then check that the loan and ownership costs fit.