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3: Analyze Your Circumstances

Prepare Your Finances to Buy a Car

Taxes calculator cash calendar coinBefore deciding what you want to buy, lease or rent, figure out what fits into your spending plan.

  • Use SAM's Budget Worksheet to investigate your spending habits and identify baseline monthly expenses
  • Define a comfortable car payment:
    • Use your spending history to determine how much money you have available for transportation expenses.
    • If you have a car payment currently, evaluate whether the amount you pay is within your means. Just because you are able to get a loan doesn’t mean that you should borrow the most you can. Sometimes having an older car without a car payment relieves stress. In other cases, an older car causes more stress due to the higher risk of unexpected breakdowns. 
  • If you do not make a car payment currently, what can you take from your discretionary spending (your “wants”) and/or your savings to comfortably afford a car payment?

Remember, you also need to cover insurance, maintenance, gas, tolls, parking and more. When calculating your monthly transportation spending plan, set aside funds for these recurring expenses and emergency car repairs. 


Find out how much vehicle your payment will get you with the How Much Vehicle Can I Afford Calculator.

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