This Is the One Number You Need to Know Before Buying a New Car

Don't forget to add these costs when buying a new car.

Purchasing a car is a big decision, and it can be hard to know what to consider when making such a large financial commitment. Many people focus on the purchase price of the car itself but forget to factor in all the other costs that come with owning a vehicle, such as auto insurance, maintenance, and taxes. Knowing your "all-in" number before you buy a new car can help you budget properly and not end up buying something you can't afford.

Insurance premiums

One often-overlooked cost when purchasing a new car is auto insurance premiums. When you change cars or add another vehicle to your policy, it is important to update your insurance policy so it reflects the correct information. This will ensure that you are getting the best coverage for your situation and paying the right amount for it. Typically, car insurance on a new car is more expensive since it's often more valuable than an older car.

In addition, the type of car you buy, as well as the price of the car, will determine your auto insurance premiums. More expensive cars cost more to insure because the cost to repair or replace them is higher. Before you buy a new car, make sure you factor in an updated premium into your all-in budget figure.

This means you need to speak with your insurer and get an estimate of what they would charge if you switched cars or added another vehicle to your policy. You should also shop around for the best rates and compare different insurers. You may find additional savings that can be used towards your car purchase.

Car maintenance and taxes

You also need to consider routine maintenance costs for any car that you buy. These expenses can add up quickly, so make sure you are aware of them and take them into account when setting your budget. To get an estimate of your maintenance costs, you can start with the car's user manual. The manual will have the manufacturer's recommended service at certain mileage intervals. The car dealer will also be able to give you an estimate of your annual maintenance costs. Websites like Kelley Blue Book and Edmunds also have calculators that you can use.

Additionally, depending on where you live and what kind of vehicle you're purchasing, there may be additional taxes associated with purchasing a new car or truck. For example, the sales tax in California is 9.5% in certain areas. So a $40,000 vehicle will actually cost $43,800 when tax is added. There are also other fees, such as the vehicle registration fee, documentation fee, dealer fees, and more that can be added to the final cost of the car. These are costs that need to be figured into your all-in number before driving off the lot with your new car.

Knowing your all-in number before buying a new car is essential if you want to make sure that adding this expense won't put too much strain on your budget each month. Make sure to factor updated auto insurance premiums as well as maintenance costs, taxes, and other fees into this number so that it reflects reality and not just the purchase price of the vehicle itself. Doing this research ahead of time will give you peace of mind when you go out shopping for your next vehicle.