How to plan for new vehicle expenses

Used car prices are expected to come down about 10% in 2023
Published: May. 2, 2023 at 5:03 PM EDT
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InvestigateTV - Used vehicle prices are still 30% higher than before the pandemic, according to recent J.P. Morgan research.

A new car buying study from NerdWallet found that 26% of vehicle owners said their car expenses are a significant portion of their monthly budgets, making it hard for them to pay their other bills each month.

Kim Palmer, a personal finance expert with NerdWallet, said if you are looking to buy right now, there are steps you can take to lower the cost.

“When you go shopping for a car, you really want to think about how the overall cost each month will fit into your budget,” Palmer said. “In general, you want to spend less than 50% of your take-home pay on your needs. And so that includes your housing, your food. So how will the car costs fit into that?”

She suggested purchasing an older model or a used car.

Palmer provided several other recommendations on how to lower your monthly vehicle expenses:

Financing: Interest rates have been rising, causing auto loans to be more expensive. Before you go into the dealership, shop around for financing options and get as low of an interest rate as possible. That can save you significantly each month on your car costs.

Car Insurance: Insurance costs are a huge factor in car ownership. Make sure you comparison shop for the best rates before you commit to a company or auto-renew your policy.

Gas Prices: Filling your tank also plays a role in overall vehicle expenses. Use apps like Waze or GasBuddy to guarantee you are paying the lowest price. You can also try the app Upside, which helps you earn money back when you fill up.

Routine Maintenance: Make sure you follow the recommended service schedule for your car. The immediate cost can actually save you money in the long run.

NerdWallet has online calculators to help you calculate how much you can afford to spend on a car plus what your overall monthly costs for the car will be.