With a vehicle, you and your partner can live out car commercial fantasies as you zig and zag on scenic switchbacks. But, just as every car ad ends with the financing information, you’re not going to live out that fantasy until you talk money, too.
Before buying a car with your significant other, align on your vehicle budget, the way you’ll share financial responsibility and the kind of car you need. Here’s how to get started.
Start the car talk over chamomile tea
Even if you’re excited about buying a car, putting down big bucks can be stressful. Split costs with your partner, and now you have to navigate two people’s anxieties and distinct money views.
To hedge relationship stress, have an open conversation about this purchase, suggests Marlow Felton, co-author with her husband, Chris, of “Couples Money: What Every Couple Should Know About Money and Relationships.” But mind the timing. “If you’re super stressed, you’ve been drinking, you’re tired or hungry, that’s not a good time,” she says. Instead, choose a moment when you’re relaxed.
Figure out the finances
First, determine how much car you can afford. Aim to spend less than 20% of both of your monthly take-home incomes on total car expenses — that includes car payments, gas, insurance, maintenance and repairs.
If you take out an auto loan, plan to hand over 10% for a down payment on a used car and 20% for a new one. If you’re paying for a vehicle in cash, we found that the lowest price you can expect for a reliable used car is about $2,500. (But consider that every additional $1,000 you spend gets you a newer, nicer vehicle.) However you pay, plan for registration fees, sales tax and a “documentation fee.”
Collaborate on a car fund
Felton suggests that couples saving for a down payment or a used car set up a shared account for that purpose. “A general rule of thumb, when saving for a big expense, is to segregate funds,” she says. “This isn’t the shoe fund or vacation fund — it’s the car fund.”
Next, agree on how often and how much each of you will contribute. Felton says contributing proportionately to your income is a good starting point — for example, you can each put in 10% of each paycheck.
Yes, that likely means you’re ponying up different amounts. But that shouldn’t matter too much. If you plan on committing long term, you should consider your money shared, Felton says.
Discuss the kind of car you need
Now that you’ve hammered out finances, determine what kind of car to buy. Start by exploring car websites, such as Autotrader or Kelley Blue Book, as well as the Edmunds Compare Cars tool. (Also see our guide to picking the right car.)
Figure out the needs your vehicle must meet. Does it need to get you to work and back without guzzling gas? Does it need to fit the five Little Leaguers you schlep to practice? Does it need to traverse icy roads?
Be honest with yourself as you separate needs from wants. You probably don’t need that automatic parallel parking feature if you live on a cul-de-sac. If a vehicle has everything you need and you still have room in your budget, then consider the nice-to-haves.
Of course, you and your significant other might not completely agree on the needs and wants — but reaching an agreement is an important step. “It can be a test for your relationship,” Felton says.
Your reward if you pass the test? Excursions on those two-lane mountain roads from the car commercials — with your budget and relationship intact.