Apply For a Loan Become a Member
Go to main content

Informational Articles

masthead banner

Know What You Can Afford Before Your Test Drive

Before you jump behind the wheel of your dream car, research these key areas that affect the real price tag of your next vehicle. Don’t let hidden or delayed costs sneak up on you!


Warranties partially or completely cover the cost of repairs on a car. For new cars, they usually run three to five years or a set number of miles driven, whichever comes first. You can also buy an extended warranty. A good rule of thumb is to be done, or almost done, making loan payments by the time your warranty ends, that way you’re not making loan payments and having to pay for repair costs at the same time. This can help you decide if you can afford a 24-, 36-, 48-, 60-, 72-, or 80-month loan in the long run.

Maintenance Costs

Not all cars are cheap dates. Luxury brands foreign imports will cost more to maintain. This includes regular maintenance checks, the cost for new parts, and the frequency of repairs as the car ages.

Fuel Economy

Consider the city and highway miles per gallon (mpg) the car gets as well as what kind of driving you’ll do. Hybrid cars can use either gas or electricity and may cost more up-front, but they can earn back that investment in lower fuel costs. Be sure to check what type of gas the car takes. Filling up with premium grade gasoline will impact your budget more.

New vs. Used

Buying a new car means larger loan payments (usually) and a greater depreciation in value when you drive off the lot, but it also means coverage under the manufacturer’s warranty and no previous wear-and-tear on the vehicle. Purchasing a pre-owned car means smaller payments and slower depreciation of car value, but it comes with a limited or no warranty and possible mechanical problems. Carefully weigh each pro and con to know which type of car you can really afford in the long run.

Leasing vs. Buying

Leasing a car is like renting it from the dealership. They will take care of maintenance costs under warranty, you get to drive a new car with a low or no down payment, and at the end of the lease you simply drop the car off at the dealership—no hassle of having to selling it.

On the flipside, mile restrictions (with a penalty if you go over that mileage) can be restrictive, you don’t build any equity into ownership of the car, ending a lease early could cost you thousands of dollars, and you must return the car in good condition or be charged for excess wear and tear.


An increase in insurance rates can be a hidden cost of a new car, because not all cars have the same insurance premiums. Call your insurance provider and ask them about rates for the cars you’re considering. Have the vin numbers ready so they can give you a more accurate quote on monthly insurance payments.


While dealerships offer auto loan financing, it’s a good idea to find out what you qualify for through your credit union or bank—the interest rates could be  lower, and they may have more loan term and length options. Traditionally, credit unions are able to offer lower interest rates to their members than other lenders. Your credit union can also help you determine what size loan best fits your budget to ensure you don’t over purchase. They’ll be able to tell you the danger of getting a 72-month or longer loan is the depreciation of the car will outpace the payments. So if you have to sell the car before you finish paying off the loan, you’ll owe more than it’s worth.

The smart car shopper knows what they can afford before touring the car lots. There’s a vehicle out there for you within your budget—know all of the financing options and additional costs and then find your new set of wheels!

Go to main navigation