There are several things that we should know when learning how to budget for buying our first car.  Buying a car may be our first major purchase. It is important to ask questions and be informed.  I bought my first car in June of 2007; and I later regretted my first major purchase. 

There are several questions that we need to ask while planning our budget when buying our first car.  We need to research which type of car we want to buy.  Factors such as gas mileage, gas consumption, as well as the make and model of car are all important decisions.  However, nothing is more important than our budget when buying our first car. Here are some questions that we should ask when learning how to budget for buying our first car.

How Can I Budget to Buy My First Car?

I did not have a budget when I bought my first car.  I didn’t even know how to budget.  My first car was an impulse purchase, you can rest assure that I will never make that mistake again.  After researching Honda, Mazda, and Toyota I decided to buy a brand new 2007 Honda Civic. I walked into the Honda dealership on my lunch hour, and I came out $31,000 later with a brand new Honda Civic.

My biggest mistake was not having a budget to buy my first car.  I didn’t negotiate the price, I didn’t ask for any extras, and I didn’t walk away.  I accepted the price that was offered, and I signed on the dotted line.  This was a huge mistake.  We should know ahead of time what price we want to pay, and we should leave the car dealership with the best car that fits into our budget.  We should not walk into the dealership with a car in mind and no planned budget, because then we end up overpaying for our first car. 

What Percentage of My Monthly Budget Should Be For My First Car?

It is a standard rule that we should allocate 15% of our monthly income towards the budget for our first car.  These expenses include parking, gas, insurance, as well as monthly car payments. As my income varies depending on the commission I earn, my car budget could be anywhere from 10% to 25% of my monthly income. .

There is another unwritten finance rule that we should budget to spend no more than 15% of our annual income on the purchase of our first car.  I often see the exception to this rule, rather than the application of the 15% rule.

What Expenses Can Not Be in the Budget for My First Car?

I quickly learned that there are several expenses that cannot be in the budget for our first car.  I had to put down a $500 deposit (in cash) to cover the license plates and registration.  This was not mentioned until after I had already signed on the dotted line.  The car was not full of gas when I bought it, there was about a quarter of a tank.  Emergencies, maintenance, and oil changes are all miscellaneous expenses that cannot be in the budget for our first car. These expenses are not regular and are often not a fixed amount; this makes it difficult to budget.

I loved my car while I had it, and I was honestly sad to sell it.  However, I regret not learning how to budget for my first car.  This was a mistake that I will not make a second time.  However, I would buy another Honda.  I loved the model of the 2007 Honda Civic, and the gas consumption was cost efficient. The service at Honda dealerships is great, except for the fact that I totally overpaid for the purchase of my first car.

Photo By Dave7

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