Ep. 5 How Much Car Can You Afford?

Budgeting for Your Dream Car: Essential Tips for Women

In this episode of 'Women Buying Cars,' host Meredith Reynolds, a former teacher turned used car dealer, shares necessary financial strategies for women to confidently purchase the right car without breaking the bank. She recounts personal experiences, including falling in love with a Range Rover, and emphasizes the importance of setting a realistic budget before car shopping. Meredith advises spending no more than 10% of take-home pay on monthly car payments or 35% of gross income if paying cash. She suggests using free budgeting apps to track expenses and avoid being 'car poor.' The episode also features a shout-out to the Subaru Crosstrek for its safety and style. Meredith urges listeners to make smart financial decisions and find great deals on used cars that fit their budgets and lifestyles.

00:00 Customer's Dream Car Hunt
00:47 Introduction to Women Buying Cars
01:04 The Importance of Budgeting
01:56 Calculating Your Car Budget
03:06 Financing vs. Paying Cash
03:53 Realistic Car Shopping
04:20 Using Budgeting Apps
05:29 Avoiding Financial Pitfalls
07:00 Exploring Affordable Alternatives
08:52 Cars I Love: Subaru Crosstrek
11:52 Final Budgeting Tips
14:32 Conclusion and Farewell

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Transcript

0:03

We recently had a customer who asked us to shop for her a specific car. She drove a Range Rover and she wanted a newer one. So we went out to online auctions, found exactly what she was looking for, purchased it and brought it to the lot. And guess who fell in love for the first time ever? with Range Rovers. That would be me. It was white with a black top and a black stripe down the side and black wheels, black accents, and I really like that look. And then inside it was gorgeous. The leather was so pretty. It had amazing features. I was in love with this vehicle. But guess who doesn't have the budget for a nearly new Range Rover? Also me. You're listening to Women Buying Cars, and I'm your host, Meredith Reynolds. I'm a former teacher turned used car dealer, and I'm here to teach and empower women to walk into a car dealership with confidence and walk out with the car that's right for them. Before you start looking for cars, it is very important to know your budget. Budgeting, not known for being super exciting and fun, but it is really necessary if you're going to make a huge purchase. It's important that you know your budget before you go car shopping because you don't want to run into a Range Rover or whatever the equivalent of a Range Rover is for you. And then start trying to convince yourself that you can afford it. You know, that's kind of a stretch, but I think I can do it. I think I can because emotions have taken over and logic is out the door. So you need to have a strong grip on what your budget is and what you can afford before you go out and start feeling the emotions and the call of a beautiful car. Many experts agree that a good rule of thumb is 10 percent of your take home pay, meaning after taxes. That is your budget for a car. So let's just say, for example, 000 a year. That's about 4, 100 a month. I've just estimated the taxes based on what I would be paying here in Kansas, that's going to of course vary. So you're going to be taking home a bit over 3, 000 a month. 10 percent of that, 300. And that's what your car payment should be if you make 50, 000 a year. If you have really outstanding credit, as of this recording in 2025, I would estimate you could get a 7 percent interest rate. That means at 7 percent you could afford about 15, 000 for a car. If your credit is poor, Good enough to get a loan, but not a good loan. You might be looking at something like a 19 percent interest rate. If that's the case, you can afford between 10, for a car. So 50, 000, you're looking at something like 000 depending on your credit, if you are paying in cash, a good rule of thumb is 35 percent of your gross income, so your total income. So if you're making 50, 000 a year and you're going to pay cash for a car, you can afford between 17, for a vehicle. Why is there a difference in price depending on financing and paying cash? Well, because you're not paying interest. if you are financing a 15, 000 car, then over the course of six years you're paying a lot more than 15, Now those numbers might feel low to you. If you're making 50, 000 a year, you might feel like you could afford a lot more than that. But you have to remember that buying a car is a lot more than just a car payment. It is insurance, taxes gas, maintenance, repair. For some of you it means paying for parking. Those estimates are conservative because they're realistic. If you think that maybe you're an exception to the rule because who knows, maybe you live in a house that's free and clear or you don't have the type of expenses that some people have. Then another way to go about this is to use a budgeting app and to figure it out for yourself. Do not pay for a budgeting app. You don't want to pay for something that tells you how much you pay for things. Get a free budgeting app. It might not have the same bells and whistles and as cool of an interface, but a free budgeting app will do the basics, which is tell you what your budget is. Track your spending every dime that you spend for, I'd say, two months. And then really look to see how much is available for a car payment. And you need to be honest with yourself. Don't just skip over that coffee. Don't just skip over that girls night because, well, we don't go out that often. So it's not a regular expense. It's an expense. So write it down. And then really look to see what you have left, not forgetting that you also need to be putting things into savings and retirement and emergencies. I'm no financial planner, but these are just some basic things that people need to think about so that they're not being car poor, not putting all their money into their car and not having enough money for the other things in their lives. Once you have come to a number that is realistic, you need to stick firm, and don't start telling yourself when you find something cooler than what you expected, that you're going to stop eating out, and you're not going to do online shopping anymore, and you're just going to have to tell the girls you can't go out with them anymore, and then you can afford a more expensive car. Well, that's not realistic. You probably won't do those things. You're putting yourself on a strict financial diet so that you can afford a more expensive car. It's going to blow up in your face and you're going to get in over your head. If all of this makes me sound like a killjoy. It's because I frequently see people shopping for cars they have no business buying. I had a sweet young 20 something come in not too long ago. She made something like 50, 000 a year. This was a good salary. But she wanted to buy a 25, 000 vehicle. And that was a poor decision. First of all, she didn't buy it because a bank wasn't willing to lend her the money. But second, she was just kind of torturing herself because I was trying to explain to her that this vehicle wasn't going to work for her, but that I did have the same make and model, just a little bit higher miles, a couple of years older, but the same make and model in good shape. That was 16, 000, which is something she could have afforded, and she didn't want that one. She wanted the 25, 000 one there are a lot of great used cars out there maybe there's a particular brand that you really want. Going back to my example at the beginning, with the Range Rover. if I continue to really love Range Rovers, I could shop for one. But, it needs to be one that fits my budget. Meaning, it's going to be quite a bit older, with higher miles. But I could find a Range Rover that fits my budget. parameters, if that's what I really want. And you can do that too with whatever it is that is your dream car. Just remember, it may be older and have higher miles. And with that, potentially comes more cost in the maintenance. Another option is being open to other brands that have some of the qualities that you admire in this dream car. I told you I loved this particular Range Rover because it was white with all black accents and a really cushy feeling inside. I can replicate that with a different brand that is more affordable. So I could look at something like a Toyota RAV4 Hybrid. They make white with black top, black wheels. and all black accessories. I could look at a Kia Sorento. There's a Jeep Compass and many other makes that do the same thing. So I could look into those and get a newer car with lower miles for the same price point as this Range Rover that I would want. And between you and me, those brands I mentioned would be much more reliable than the Range Rover. They don't have a great reputation. So just keep that in mind. There are ways to stick with your budget and get a lot of what you want, even if it's not exactly what you want. Now we've come to a part of the show I like to call Cars I Love. The car I love today is the Subaru Crosstrek. First of all, just talking about all Subarus in general, we're looking at all wheel drive vehicles. Subarus are known for their very high safety standards. I used to think maybe this was just marketing, you know, claiming to be safer than another car. But I have since learned that they actually prioritize safety throughout the whole design of the car. They're prioritizing driver visibility and crash protection. They do that by having large windows and a low hood line so that you have maximum visibility out the front window. Another thing they do in designing the vehicles is minimize blind spots. They use what they call a ring shaped reinforcement frame when they build their cars, which forms a type of cage around the cabin to absorb and distribute shock at all angles. That came from the Subaru website. And then they have lots of different safety features. Adaptive Cruise, Lane Departure Warning. Crash Detection Warning. They always get the top five star, top safety pick plus rating. And that goes across their brand. Subs Why did I pick the Crosstrek over other popular models like the Forester and the Outback? Also very good solid safe cars that people love. They're very popular. I like the Crosstrek, frankly, because I think it's cuter. It has a sportier look. The lines are not as quite squared off as a Forester and an Outback. So I like that sporty look. And this might seem like a small thing, but I like the wheels of a Crosstrek. I don't know how to explain them, but they just have more style than a standard wheel. So that stands out to me. It is considered a compact SUV. To me, it's kind of just like a hatchback car, but they call it a compact SUV. It's a five passenger Because it is smaller It is easier to park than say an Outback. It's going to get up to 34 miles per gallon on the highway. And another reason I really like the Crosstrek. Besides being sporty and cute, is that they come in a lot of different colors, some of which are not a standard car color. Okay, they're going to come in silver and black and white, but also, depending on the year orange, army green, khaki, they have a dark red and a true red, teal, as someone who looks at a lot of cars all day long, and a lot of black, white, and silver cars. I really like seeing some variety and seeing some of the fun colors that they come out with Crosstreks. So, if you need an all wheel drive that's very safe, consider the Subaru Crosstrek. Now let's get back to talking about budgeting. It's a waste of your time if you're going out and looking at things that are budget. time. Banks typically use an algorithm. They take your credit score and your income and how much debt you have, how many credit cards you have open. A whole lot of stuff goes into their computer system and then spits out a rating to tell them how big of a risk it is to give a loan to you on this particular vehicle. If you're trying to buy a car that is not right for you and your finances, you're not going to get funded or you'll get a loan but it will be with a really high interest rate, a lot of money down, and a monthly payment that's actually out of your budget. If you're paying in cash, you're going to be stripping yourself of so many necessities and an emergency fund and other things that you need just to live.. It just takes a lot of money to live. So you cannot put a huge portion of your salary into one car. So to recap. Set your budget before you go shopping and get emotionally invested in beautiful cars. Know what you're looking for and then stick to that budget. A good guideline is spending on a car payment 10 percent of your take home pay after taxes. If you're paying cash, a good rule of thumb is no more than 35 percent of your gross income. So what you make before taxes are taken out. If you don't want to go by those numbers, get a free budgeting app. Track every single dime you spend for at least two months, and then look to see what you have left over. How much could you truly spend on a car? While also paying for insurance, taxes, gasoline, repairs, and maintenance to that car. Be honest and don't tell yourself lies about how you're going to stop spending money on going to the movies with your friends. Or vacationing every summer. Don't lie to yourself. You're not going to stop doing those things. And you don't want to. You don't want to cut out people or other joys in your life, just so you can have a particular car don't get in over your head and start ruining your credit because you can't afford your car. Make good choices up front and realize there are a lot of great used cars out there. Thank you so much for listening. If this has helped you, please share it with another woman in your life who may need to hear some tough love when it comes to budgeting. Please give me a five star review, subscribe to the show, and if you are in Kansas City, please come say hello to me at Reynolds Automotive. Thanks again, and happy driving.