How to Budget for a New or Used Ford

Should you go for a brand-new top-of-the-line Mustang, or a base-model pre-owned Fiesta? The choice most of would make is obvious, if money were no obstacle.

That's the compromise all of us must make when shopping for a vehicle: what we would like vs. what we can afford. Sometimes you want a throaty V8 sports car, but buy the most fun you can get for under $18,000.

Figuring out your budget is easy. You'll want to have your bank statements at hand for reference, and figure out how much income you make in a month. Subtract your rent and utilities, any loan or credit payments you are making, food, miscellaneous purchases, and savings deposits. What's left over is how much you have to spend each month on auto loan payments, taxes, maintenance, and repairs!

Be sure to account for the variation between months—your electric bill might be deceivingly low in winter, and spike in summertime when you're running the AC constantly. Never commit to loan payments you might not be able to make. It's better to be conservative and choose a practical used model than stretch the limits of your financial reserves with a luxury car.

Categories: Finance
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