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Fitting Your Car Finance Payment Into Your Monthly Budget: A How-to Guide

An Overview Of Buy Here Pay Here Used Car Financing and How It Fits Into Your Life

Buying a car is an exciting time for anyone, especially if you haven’t upgraded in a while. Although it can be easy to get distracted by the gloss and shine of your next potential vehicle, don’t forget the financial responsibilities that come with buying a car.

A car finance payment will most likely be your largest monthly expenditure, except for maybe your rent or student loan. This is why it is so important that the car finance options you choose fit within your budget.

With careful planning, you can make sure that your car finance payments don’t cost you more money than you make in a month. Keep reading to learn how to manage your money while getting used car financing.


Used Car

How Much Money Can You Spend On Car Financing?

Before taking on another monthly payment, you should take the time to compare how much money you make each month and how much money you have to spend each month. List all sources of income, such as jobs or side hustles, and then sort your bills into essential, non-essential, and variable items.

Items like rent, your cell phone bill, and insurance remain roughly the same month-to-month. Groceries, entertainment, certain utilities, and dining out are variable items with costs that could change, some of which are non-essential and can be used for a car finance payment.

Looking at all your bills together will help you see where your money goes every month and where you can reduce spending to fit a car payment into your expenses.

Action items: 

  • Create a detailed list of all your monthly income sources. This includes any jobs or benefits checks you receive.
  • List all your monthly expenses into categories.
  • Find expenses you can cut back on or get rid of.

Cut Back On Other Costs

To make room for your car payment, you might need to do things like:

  • Cooking at home more, because food from restaurants can be more expensive.
  • Canceling extra subscriptions, like streaming services you don’t watch very often.
  • Cut back on how much you spend on entertainment or hobbies, like going to the movies or club.

Action items:

  • Look at all your monthly spending and find things you don’t need to pay for anymore.
  • Get rid of these expenses by canceling services or committing to eat at home.
  • Put the money you save toward used car financing.

Set a Realistic Car Finance Payment

Before you start shopping for a car, figure out how much you can spend on a loan payment every month. Use the information you gathered when looking at your income and non-essential expenses.

 The financial experts at NerdWallet recommend that your total car expenses (including car finance payment, insurance, fuel, and maintenance) should not be more than 20% of your monthly take-home pay. Anything higher, and it could be difficult to make your payments on time and in full.

 Action items: 

  • Calculate 20% of your monthly take-home pay. Grab a calculator. Enter your monthly take-home pay and multiply it by 0.20. The number you get is close to the total amount you can afford to spend on a vehicle. For example, if you earn $2,000 a month, 20% of your take-home pay is $400. If you earn $4,000 a month, you can spend $800.
  • If 20% is less than you expected, you can find ways to earn extra money, like through a side hustle. Or, you can save up money for a larger down payment to reduce the amount of your monthly car payments.

Increase Your Income

If cutting expenses alone isn’t enough to accommodate your car finance payment, consider finding ways to increase your income. You can take on a part-time job, try gig work, or make money using a unique skill, like hair braiding, cleaning, pet-sitting, or painting. Even if you only earn a little bit more money a month, that extra income could make you feel more comfortable with a car finance payment.

Action items: 

  • Find ways to make extra money.
  • Take on a part-time job or gig work.
  • Get creative and put your special talents to work for you.

Keep Track Of Your Budget

Your money situation and budget can change over time. Regularly reviewing and adjusting your budget keeps you on track with your car finance payments and overall financial goals. 

By getting in the habit of self-monitoring your spending, you’re far more likely to identify issues in the earliest stages and make timely adjustments.  

Action items:

  • Set a monthly reminder to review your budget.
  • Adjust your budget based on changes in income or expenses.

Discover Your Car Finance Options

Incorporating a car finance payment into your monthly budget requires careful planning. By taking the time to look at your finances, you will understand the kinds of vehicles you can afford. Even if you have bad credit, car financing is still an option at buy here pay here dealerships in Kansas City.

You can explore used car financing by searching for buy here pay here dealerships near you. After reviewing the car lot’s stock of used cars, you can use what you learned here to estimate how to incorporate a car finance payment into your monthly budget.