So, you’re finally on your own with a new job. If you’re like most Americans, a car is a necessary item—88 percent of Americans use their car to get to work. The path to getting an auto loan is full of pitfalls that can extract extra money over the course of the loan. And with the price of gas at record levels, getting a car that will serve your needs and fit into your budget may require some planning.
Here are a few tips to keep in mind before you visit the car dealer. Avoiding these landmines could mean saving thousands of dollars over the course of your loan payments and can help you get a car that’s right for your budget.
Know the complete cost of owning your car over the next five years. Make sure that you include room in your budget for insurance, repairs, parking, and of course, gasoline. Online calculators like the one at edmunds.com can help you calculate costs over the long run. A recent analysis showed that if gas stays near $4 per gallon, a large vehicle like a Ford F-250 will cost about $100,000 over five years, which includes the costs of gasoline, insurance, and repairs. Compare this to a Ford Focus, which will cost only $40,000 over five years, and you can see how knowing the long-term costs of driving can make a big difference to your budget.
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