Unless you live in an area with a great public transportation system, the chances are high that you need a car to get to work, shop for groceries, and perform other necessary errands.
However, even the best bus and subway routes can land you a few blocks away from your desired location. Owning your own car is convenient for its constant availability and higher flexibility.
But when the prices for a car continue to rise with the cost of living, buyers often are faced with a dilemma: buy a cheap car that can break down more easily or spend more on a newer, more dependable car.
Both options have their advantages and disadvantages, but there is a sweet spot for spending that can maximize your chances of getting the best bang for your buck.
How much should you spend on a used car?
Financial experts generally agree that you should spend around 20% of your annual income to get a dependable, newer used car that’s within your budget. This strikes the right balance between paying a more affordable price while helping you avoid older vehicles that are more likely to be money pits for repairs.
Frugal spenders can find a decent used car at 10 to 15% of their annual income, but they should be prepared for possible breakdowns and frequent repairs.
If you want a luxury car and your finances can handle the expense, 35% of your annual income should be the maximum of what you spend.
If you need a dependable used car to get you to where you need to go, check out NIADA certified used cars.
