Introduction
Buying a car in 2025 can feel overwhelming, but if you follow the right steps, the process becomes easier. This guide breaks down five steps to help you find a car that fits your needs without spending more than you should.
We'll also go over helpful tips, examples and ways to save money so you feel confident during the process.
Step 1: Budgeting for Your Car Purchase: How Much Can You Afford
How Much Should I Spend on a Car in 2025?
It's important to know how much you can afford before you start shopping. Remember to include more than just the car's price:
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Down Payment: Paying more upfront can lower your monthly costs. Try to save at least 20% of the car's total cost if you can.
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Monthly Payments: Your car payment should stay within 10-15% of what you bring home each month.
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Insurance Costs: Get quotes from different companies to find a good deal. If you don’t drive much, pay-per-mile insurance may save you money.
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Taxes and Fees: These costs vary depending on where you live.
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Maintenance and Fuel Costs: Japanese cars are known for their reliability and lower maintenance costs, making them a smart choice.
Budget Example
If your monthly take-home pay is $2,000, aim for a car payment of $200 to $300. Adding gas, insurance and maintenance could bring your total car expenses to around $400 to $500 per month. This ensures you stay within a reasonable budget and avoid financial stress.
For example:
Total monthly car costs: $450
If your monthly take-home pay is $5,000, a car payment of $500 to $750 is reasonable. Once you add gas, insurance and maintenance, your total car expenses may be closer to $1,000 per month.
Saving for a Down Payment
Building a down payment takes time. If you plan to buy a car in 6 to 12 months, consider setting aside a set amount each month. For example:
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Save $300/month = $3,600 in one year
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Save $500/month = $6,000 in one year
Step 2: Choosing the Best Car for You: Research, Reviews & Recommendations
How Do I Choose the Right Car in 2025?
Decide what matters most to you. Are you looking for:
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A Small, Easy-to-Park Car? Great for city driving.
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A Family Car? SUVs or minivans often have more space.
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A Tough, Off-Road Car? Models like the Subaru Outback are ideal for outdoor adventures.
Recommended Japanese Cars for Low Maintenance
Here are some reliable Japanese models that are affordable to maintain:
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Toyota Corolla: Known for long-term reliability and low repair costs.
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Honda Accord: Offers a comfortable ride and great resale value.
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Nissan Altima: A solid choice with a smooth drive and dependable engine.
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Mazda CX-5: A stylish yet reliable SUV that’s easy to maintain.
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Subaru Forester: A spacious SUV with all-wheel drive for stability and durability.
Comparing Cars
When comparing cars, look at:
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Safety Ratings: Websites like NHTSA or IIHS offer safety details.
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Fuel Efficiency: A car with better mileage will save you money over time.
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Technology: Features like backup cameras, parking sensors and smartphone connectivity may make your driving experience easier.
Where Can I Read Car Reviews?
Websites like Consumer Reports, Edmunds and U.S. News provide reviews and ratings for most cars. You can also use sites like Auto Cheat Sheet to find cars that match your budget.
Step 3: Get Pre-Approved for a Car Loan: Secure the Best Financing Rates
Why Should I Get Pre-Approved for a Car Loan?
Getting pre-approved for a loan gives you a clear idea of what you can afford and helps you negotiate better deals at the dealership.
Steps to Getting Pre-Approved
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Check Your Credit Score: Higher scores often lead to better loan rates.
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Shop for Lenders: Compare offers from banks, credit unions and online lenders. PrimeWay Federal Credit Union offers one of the best car loan rates without any hidden fees compared to other lenders.
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Apply for Pre-Approval: Many lenders provide quick online approvals that take just minutes.
What Credit Score Do I Need for a Car Loan?
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Excellent Credit (720+): Qualifies for the lowest interest rates.
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Good Credit (660-719): Offers reasonable rates with manageable payments.
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Fair Credit (600-659): May qualify, but with higher interest rates.