Car Buying Financial

Evaluate car affordability, financing options, depreciation, insurance, and total cost of ownership before setting foot in a dealership.

25 action items~20 min to complete5 sections

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Set Your Real Affordability Limit

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Apply the 15% rule: total vehicle costs should not exceed 15% of take-home payKey

Calculate your maximum monthly payment (not sticker price)

Determine your down payment (20% of vehicle price recommended)Watch out

Confirm you can still fund emergency fund and savings goals after adding this paymentKey

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$735

Average U.S. new car monthly payment (2024) — a 20-year high

20%

Average Year 1 depreciation on a new car — immediate equity loss

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Research insurance costs for your specific vehicle before buyingAction

Estimate annual fuel costs (annual miles ÷ MPG × fuel price)

Research reliability ratings and expected repair costs

Calculate 5-year depreciation for your target vehiclesWatch out

Factor in registration, taxes, and any HOA/parking costs for your area

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Get pre-approved for auto loan from your bank or credit union before visiting dealerKey

Compare rates: credit union vs. bank vs. manufacturer financing

Understand how loan term affects total interest paidWatch out

Avoid rolling negative equity from a trade-in into the new loanWatch out

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Research fair market value on Edmunds, KBB, and Carvana before negotiatingAction

Negotiate the purchase price before discussing trade-in, financing, or add-onsKey

Decline extended warranties, paint protection, and gap insurance at the dealerWatch out

Request the full out-the-door price in writing before signing anything

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Compare a 1–3 year old certified pre-owned vs. new equivalent

Verify CPO vehicles include manufacturer warranty extension

Run the total 5-year ownership cost for both new and CPO options side by sideAction