How to Prepare for the Costs that Come with Buying a New Car

Man admiring a new car and considering the daily expenses of owning a car.

Prepare for daily expenses of owning a car.

When it comes to buying a new car, there’s more to consider than just the sticker price. You also have to factor in the costs that come with buying a new car like gas, insurance and maintenance.

You’ll want to have enough money to cover these daily driving expenses as well as making your monthly car payment. Before you buy a new car, take a look at the following car expenses and factor them into your savings goals.

Down Payment

Although it may not be mandatory to put a down payment on a new car purchase, it can be beneficial in the long run. Keep in mind, the more money you put down upfront, the less you end up paying in interest on your auto loan. Set a goal of how much you want to save for your down payment—make it a percentage of the car’s value.

For example, if your price range for a vehicle is $25,000, saving five percent would be $1,250 and saving 20 percent would be $5,000. Set a goal that’s realistic for your budget. Figure out how much you can set aside each month to reach your down payment goal. If you saved $105 each month, it would take you one year to save five percent.

Auto Loan Payment

When budgeting for your new vehicle, you want to make sure you can afford the monthly loan payment. It’s a good rule of thumb that the vehicle’s purchase price should not be more than half your annual income. If you make $40,000 a year, you should buy a car that’s $20,000 or less.

It’s also a good idea to factor in other debts you may have. If you have student loan debt on top of a mortgage and excessive credit card debt, you may want to consider purchasing a less expensive car. Use our Auto Loan Calculator to figure out what purchase price will best fit your budget. You can also determine how much your monthly loan payment would be.

Once you figure out how much car you can afford, we can help you finance it with an auto loan.

Registration and Taxes

You are responsible for paying the registration fees and taxes on any vehicle you own. These expenses are due when you first buy a new vehicle and then once a year for as long as you own the vehicle. Fees to register and title your vehicle are based on factors like the age of the vehicle, weight and taxable value. Typically, the newer the vehicle and the bigger the purchase price, the more expensive it is to register. For more information about registering your vehicle in Colorado, visit the State of Colorado website.


Before you buy a vehicle, know the MPG (Miles Per Gallon). This will tell you many miles you can drive on a gallon of gas—also telling you how often you’ll have to stop at the pump to fill up. Set a gas budget for yourself and buy a vehicle that fits your budget. Map out how many miles you drive to and from work and any other trips you normally make each week. This will tell you how much gas you need to get around and help you determine the type of vehicle you need. Check out the U.S. Department of Energy’s website to compare the fuel economy of different vehicles.


Auto insurance is another must-have of owning a vehicle. Auto insurance can help protect you financially if there’s damage to the vehicle. It’s also a state law and a lender requirement to have auto insurance. If you’d like a free auto insurance quote, visit our website. Your credit union membership could result in some nice savings.

Maintenance and Repairs

Maintenance and repair expenses are a little bit more difficult to calculate. You can count on certain expenses like oil changes and rotating your tires, but some maintenance and repairs will happen unexpectedly. That’s why it’s a smart idea to set aside a vehicle emergency fund because you never know when you’ll need a little extra cash to fix your car.

Knowing the costs that come with buying a new car upfront can help you prepare and save ahead of time. That way when you finally get the keys to your new ride, you’ll be able to enjoy it even more.