Buying a car

You’ve probably convinced yourself to keep that new Jeep or that Ford F-150 in your bookmarks just for fun. But maybe you’re moving that dream to reality--you’ve started clicking through your local dealerships, comparing prices, and considering the nitty-gritty details of buying the car you’ve been eying for years. It’s time for a little calculation. 

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If you’re looking more seriously into buying a new car, it’s important to budget for your vehicle’s lifetime. Aside from a house, cars are one of the larger purchases you’ll make, and it’s important to plan the purchase carefully. Most cars will cost a bit more beyond the price tag over time. From fuel economy to maintenance and upkeep, you’ll want to consider all angles of your new ride to get the most for your dollar (and that might even require a quick test drive). Vehicle upkeep will inevitably include expenses like fluid replacements, oil changes, tire rotation, and it’ll include other forms of maintenance as your car ages. 

Of course, you’ll especially want to consider the way in which you pay off your new car in the first place. You might choose to pay for it upfront, with cash, but it’s more likely you’ll choose to finance your new vehicle, and pay it off over time with an auto loan. A general rule of thumb is the larger the down payment, the better off you’ll be, but either way you’ll want to make sure your payments don’t exceed 15% of your monthly income. If you’re trading in a vehicle you’ve already paid off (or even in the process of paying off), an appraisal will help you determine how you can include your car’s value into your new vehicle’s down payment. But keep in mind too, that how long you pay off your vehicle—the terms of your financing--will be determined by factors like your credit score and your initial down payment.

Before you break out the calculator or the abacus yourself, use CarMax’s interactive car payment calculator to start budgeting out your new car. You can get an estimate of your finance terms by entering information like your new vehicle’s price, your credit score, down payment and term length, as well as tax, title, and associated fees by state. You can get a good grasp of your annual percentage rate based on your entered credit score, and you can get a handle on the real costs behind that initial price tag. Plug in a few different numbers to compare your options and to get an overall idea of the price range you’ll want to stay in during your search. 

Happy shopping!