How Much Car Can Your Afford in Ann Arbor, MI

How To Determine How Much Car You Can Afford

Imagine cruising around in a car with luxurious leather seats, top-notch sound systems, and cutting-edge technology. While this may seem like a dream, the reality often calls for compromise. It's essential to balance the desire for deluxe transportation with everyday expenses. Understanding the full costs of owning a vehicle is essential for making informed decisions that align with your budget.

Breakdown Of The Cost Of Ownership

The initial cost of a vehicle is just the beginning when it comes to ownership expenses. Various factors play a role in the cost of ownership, such as:

• Maintenance and Fuel: Furthermore, the amount you spend on fuel and regular maintenance, as well as unexpected repairs, are inevitable costs to consider, regardless of how well you maintain your vehicle.
• Depreciation: When you drive a new car off the lot, depreciation immediately starts eating away at its value. This often overlooked cost can quickly add up.
• Taxes and Fees: Ownership also comes with various taxes and fees, including sales tax, registration fees, and insurance premiums. These expenses add to the total cost.
• Interest On Financing: Financing a vehicle purchase through a loan means accruing interest over time, increasing the overall cost.

Plan A Monthly Transportation Budget

It's essential to allocate 10% to 15% of your monthly household income to transportation, as advised by finance experts. This budget should cover your insurance, car payment, maintenance, and fuel. If your monthly income is $5,000, it's recommended to allocate between $500 and $750 for transportation expenses.

How To Calculate Your Car Payment

When determining if a car payment is affordable, list potential vehicles and gauge their fuel and insurance expenses. Once these, along with maintenance costs, are subtracted from your transportation budget, you'll gain a better understanding of affordability. It's recommended by the American Automobile Association to allocate $600 to $700 per year for maintenance, which comes to about $50 to $75 monthly after factoring in inflation and any unforeseen repairs. Also, getting an insurance quote can help you fine-tune your budget.

How Much Money Will You Spend On Fuel:

1. Estimate your monthly driving distance by multiplying your daily commute miles by 30, the average number of days in a month.
2. Calculate your monthly fuel consumption by dividing the total distance traveled by your vehicle's fuel efficiency.
3. Plan ahead for your monthly fuel expenses by calculating the total cost based on your vehicle's fuel consumption and the current gas price. Don't forget to include a buffer for potential price fluctuations.

Stop By Subaru of Ann Arbor To Find A Vehicle Within Your Budget

Considering a vehicle purchase requires careful financial planning as it has long-term implications. Assessing the total cost of ownership and monthly affordability will guide you to make an informed choice. At Subaru of Ann Arbor, we offer a wide range of new and pre-owned vehicles, so don’t hesitate to stop by if you’re ready to purchase a vehicle like the 2024 Subaru Outback.