Shop Cars Online
Shop and Set
Your Car Buying Budget
Shop cars online and set your car buying budget...
The 4th of 11 essential steps in the car buying guide
Assuming you've followed the first three steps in the car buying guide, it's time to get to the fun part...Ready? Set? Shop!
As you browse some of the following sites, I'm sure you'll see why the old school, drive dealership to dealership until you've found the "right one," method of shopping, is a thing of the past.
I am a big fan of online car shopping and here's five quick reasons why, you'll:
- Save Big Time
- Save Big Money
- Easily Gain Knowledge - Knowledge is Power!
- Eliminate Tons of Aggravation
- Drastically Increase Your Leverage - Negotiating
Get Quotes for an Accurate Budget
Before we can get to calculating an accurate and comfortable budget for you, we'll need to get some quotes to have a solid starting point.
This is really simple, free and will probably save you some money right out the gate, because we're going to make up to 5 local dealerships compete to earn your business.
Get your Free Price Quotes at Edmunds.com. It shouldn't take more than a couple of minutes and you should be pleasantly surprised at how much you'll save.
Now that you've got your quotes we can move forward to setting your car buying budget. By the way, by requesting those easy quotes you've already begun to take advantage of and maximize the five benefits of online car shopping listed above. Told ya' it was easy!
Other Car Buying Site of Interest
Cars Direct offers a very unique car buying service where they will guarantee the lowest prices on new cars and allow you to completely skip working with a car salesman.
Get your free quotes here CarsDirect and compare those quotes to those from Edmunds. Now you're really increasing your leverage and maximizing your savings. All this and you haven't even had to leave the house. The Internet is cool!
For Bad Credit
The next car buying website is for customers with some credit challenges. They are both the dealer and the lender. If you know you've got some credit issues, then DriveTime is an excellent source for a car and may be your best starting point. They have a 98% approval rate and a very nice selection of cars for sale.
Shop cars online with DriveTime first! Bad credit, no credit, no problem.
Quick Car Buying Tip
Be sure to keep in mind as you shop cars online to print, print, print...Anything that you feel would be useful for you as a reference when at the dealership.
Bring copies of your quotes, pre-approved auto loan, blue book values, invoices, ads from other dealers with similar vehicles, etc.
Set Your Budget...
How Much Car Can You Buy?
Now that you know how much you were approved for and roughly how much car dealer insurance costs (auto, warranty, GAP, etc.) will be for your new vehicle, you've probably got an idea of what kind of monthly payments you'd be comfortable with, so let's figure your car buying budget.
FYI: Auto lenders typically factor 15% of your gross monthly income as a comfortable payment average.
The key to figuring your car buying budget is to know what your approved amount and finance rate translate into a monthly payment...Use my Basic Car Payment Calculator to figure that.
Assuming that is a comfortable payment for you, then let's quickly figure what your approval is all about.
Is your auto loan approval an "out the door" (OTD) amount (includes TT&L and back end products) or is it plus TT&L and back end products?
For this example
I'll assume that it is an OTD amount.
First, take your approval amount and subtract:
- Extended Warranty costs
- GAP insurance costs
- Tax, Title & License fees
It would look like this (assuming an 8% state tax rate and figuring 2% of the sales price for licensing fees):
|- $1,500||Subtract Warranty|
|- $400||Subtract GAP|
|- $1,448||Subtract Tax (8% of $18,100)|
|- $333||Subtract Licensing (2% of $16,652)|
|$16,319||Estimated Buy Price|
Now that you know your "BUY" price you can adjust that number up by 10 - 25% for the "SALE" prices of vehicles you can comfortably look at. This is higher, because you will be negotiating them down.
Note: The percentage you use will depend on how aggressive you plan to be when negotiating.
Of course, you'll want to adjust the above numbers to fit your states tax rate, license fees, dealer documentary fees, whether or not you want a warranty, GAP insurance, etc.
In this budget example you could look to shop cars online with asking prices of $17,950 to the high end of $20,398.Now that you've had a chance to shop cars online...
What would you like to do next?
Or you can...Review the Car Buying Guide table of contents by returning from -
Shop Cars Online to Car Buying Guide
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