Buying a car

Some people never buy a car — they live in cities where public transportation and conveniently located shops, schools, and businesses make having a car a luxury, not a necessity. But if you need a car or you think you simply can’t live without one, there are some financial issues to resolve before you go car shopping.

The first is how much car you can actually afford. Because you may be able to finance your car with a loan if your credit is good and you have a steady job, you usually don’t have to come up with the entire cost in cash. (Then again, if you can wait to pay cash, it’s not a bad idea.) But if you’re borrowing, you will probably need a down payment in cash, usually about 10% of the total price. And you need to know how much of your monthly budget you can allot for installment payments on a car loan, plus the cost of gas, insurance, and maintenance. Remember that if you’re younger than 25 or live in a city, insurance costs can be very high.