We can think of lots of great reasons to buy a new or used truck. Question is, how much? We’ll show you how to figure that out – it’s just like honing in on the bullseye at the shooting range.
Here’s a few ways to answer our key question, does it need to:
Carry everything you need, whether for work, home tasks, or recreation?
Have enough power for towing your trailer or boat?
Have the clearance needed for off-roading or soft beach sand?
Look awesome, and have great electronics?
Have a big enough cab to drive your friends too?
Be a reasonable price so you can afford it?
Only you know best for the first 5 questions, and only you know what’s really a need vs. a want. That last question – how much can you afford – is more than a little pesky, isn’t it? You want to maximize what you get in the truck without breaking the bank or keeping you from having enough money left over for the hunting or fishing gear you need. That’s where we come in.
Here’s a good rule of thumb from finance pros: shoot to spend no more than 10% of your take-home pay on your truck payment. Also, make sure you spend no more than 15% on truck expenses overall – gas, maintenance, insurance repairs, accessories. These numbers are like the bulleye you are shooting at – keep them in your sights at all times.
So here’s how you go about tightening your shooting pattern and then hitting the bullseye dead center. Follow these 5 steps – and be sure to do the first 3 BEFORE looking at vehicles:
STEP 1 – Set Up Your Target
When setting up your shooting target, it’s a good idea to set up as close to the shooting conditions you’re practicing for, whether hunting or competition: distance, size of target, shooting conditions.
Same thing goes for buying a truck. Write down your monthly take home income (on average if itvaries each month). Calculate 10% of that as the monthly truck payment you target to be at or below. Also, write down 15% of that number as your target for total monthly expenses. For example, if your take home pay is $4,000, you’ll want your monthly payment to be $400 or lower, and your total monthly expenses to be $600 or lower. Think of these numbers as a firm target when you are looking at trucks to buy.
Only think about moving the target if you are buying an older used vehicle, you shouldshoot for something lower, like 6-8% because you’ll probably have higher expenses. If brand new, you could fudge a little higher 11-12% but don’t get pulled into much higher – it’ll come back to bite.
Pro-tip: When looking for your truck, think about everything you’ll spend, not just the sticker price. Use our handy bullseye worksheet to make sure you don’t forget anything.
STEP 2 – Sight Your Target Well
Every target has a few rings around the bullseye – is it a big target or does it require a tight pattern? How far are you from the target, what kind of shot will it require? Is there wind or other factors? Do your sights need adjusting, been a while?
By this we mean, how much in expenses beyond the monthly payment for your vehicle will you have? What will it take to hit the bullseye – your monthly spending target – by sighting in on your spending target well. Get ready – it usually takes a few rounds to hit the bullseye consistently.
This is because, just like in shooting, there are a few variables to make it interesting. How much truck for the price depends on how well you negotiate. Insurance goes up as the price goes up. Gas mileage can be a big deal. How much you put down and the amount left that you finance determines your actual monthly payment.
So write these things down as well: all the things that add up you’ll want to keep under 15% of your monthly take home pay. Think of these as starting numbers – like hitting the outer rings of your target in your initial rounds – you’ll come back to readjust and hit the bullseye later after you adjust your sights a few times:
• Approximate insurance quote from your provider, monthly
• Gas mileage of the type of truck you’re interested, how many gallons you burn on average and the total monthly cost
• How much you can afford to put down (one-time)
• Accessories or electronics you want to buy after you purchase (one-time)
• How much you want to set aside each month for future repairs so they don’t sting when they happen (monthly)
Great job, by now you’ve set up your target and adjusted your sights. Let’s startshooting.
Step 3: Take A Few Practice Rounds
At the range, it usually take several rounds of practice, adjusting your sights, and tightening your pattern before you get consistent and nail the bullseye time and again.
Same thing goes for buying a truck – take a few rounds of looking at different options, online and in person. Don’t commit till you’ve had a chance to adjust your sights a few times. This means taking your time, don’t commit to a truck on the spot or you’ll probably regret it later if it doesn’t have everything you need or you committed to too high a price.
Everything that goes into your truck – size, towing capacity, gas mileage, looks and upgrades, electronics, etc. should come inside your target numbers. Just like a shot outside the bullseye won’t count as a bullseye – it’s that simple.
That’s why we gave you a few columns on our target worksheet, so you can tighten your pattern as you look at a few options and refine the numbers.
When looking at financing options (which you should do online before getting to the dealership, so you know exactly what you can get and increase your bargaining power), get a sense for what the final payment will be by plugging in the amount you’ll pay down, and how long the loan term will be (we recommend 36 months to pay it off faster but no more than 60 months to stretch the payments out). Know that a longer loan term will reduce your payment, but you’ll pay much more in interest.
Now that you know how much you can afford, here’s a little more on what determines how much you can borrow – and what it’ll cost you: • Your credit score, will in part determine your interest rate • Your loan term: how many months till the loan is paid off • Whether you buy new or used. New trucks loans tend to have lower interest rates.
Step 4. Nail The Bullseye – Set Your Max Target Purchase Price
Final checks before your final round: safetycheck, wind check, alert but relaxed. Everything leading up to this moment determines if you are ready to nail the bullseye – 5 out of 5, or even 10 out of 10 times. A good shooter knows when they are ready for the shot, and when to back off if a distraction comes up or not everything is ready.
Final checks on buying your truck: don’t forget, there will be sales tax and fees, on top of the price sticker. Once you have a sense for the loan amount you can afford, and everything else on top of it, you can finalize a realistic idea of the purchase price you should consider. For example:
• Sales tax: Typically 5% to 10%, varies by state and local. • Registration: Estimate using the website for your state’s department of motor vehicles. • Documentation fee: Can range from as low as $80 to even as high as $400, varies by state.
A note on finding the best truck and aligning it with your bullseye target price. Lots of websites, such as dealer sites, CarSense, Carvana, Kelley Blue Book, AutoTrader, and Edmunds have car finder search tools to show you different models listed by price.
But remember to set the bar lower than the total loan amount you estimate you can afford. This is because the sales tax and fees can easily add up to an extra few thousand dollars.
Just like a consistent shooter, back off if you’re not lined up firmly on the bullseye. If there are still moving parts that may add up to more than your target, don’t buy till you know what you’re getting into.
Step 5 – Take The Target Home – In Your New Truck!
Congratulations, you nailed the bullseye, and have a great looking target to prove it. Take it home to show off to family and friends. Perch it up on the fireplace mantle.
Same thing with your truck. If you followed our steps, you probably honed in on what you really want and need, and dropped or changed a few things or so your overall price fit within your target budget and monthly expense. You can feel really good about that – not just showing off your truck but knowing that it won’t break the bank.
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