Credit: Matthew Henry via BURST

A general rule of thumb is that your car expenses shouldn’t exceed 20% of your take-home pay. Pushing past this percentage is not a good idea. You might run out of funds meant for otheressentials, like groceries and utilities, or you could push yourself into serious debt.

Read ahead to find out what car expenses you’ll have to manage as a new owner. Can your budget handle all of them?

Car Payments

After you choose your vehicle at the dealership, you will have to make monthly car payments. Car payments have risen significantly in recent years. The average car payment is approximately $700 a month. Although, there are reports that some drivers are spending $1000 per month on car payments.

You don’t necessarily have to pay this rate forever. You could refinance your auto loan in the future to reduce your monthly payments and improve the terms of the agreement.

Car Insurance

Insurance is not an expense you can skip to save money. It’s mandatory in almost every state (New Hampshire and Virginia are the only exceptions). It’s illegal to drive your vehicle without this insurance plan.

What can you expect to spend? The average cost of car insurance is $1553 per year, although your rate will depend on a variety of factors. For instance, driving incidents like speeding tickets and DUIs will raise your rate significantly.

What else will affect your rate?

• Your age
• Your credit score
• Your home state
• Your vehicle

Car Repairs

When you purchase a new vehicle, you won’t need to worry about paying for frequent car repairs. The vehicle should be in good condition. Minor repairs should be covered under the manufacturer’s warranty, while collision-related damage should be covered by your car insurance plan. Despite these assurances, you should still be financially prepared to cover the costs out of pocket when it gets towed to a mechanic.

How can you prepare your budget for car repairs? Put together an emergency savings fund now. Ideally, you should aspire to save between $1000-$2000 inside it. With this amount in your fund, you can afford to cover any minor repair services out of pocket. If you have coverage, you can replenish your fund once your insurance claim goes through.

When you don’t have enough emergency savings, you can apply for a short-term loan as a solution. Go to the website CreditFresh to see whether you meet all of the requirements to apply for this type of loan. If you do, fill out an online application. You just might get approved for the short-term loan, which you can use to cover the repairs in a hurry.

Saving up for emergency repairs is very important when you own a used vehicle. Since your vehicle is older, it has more wear and tear — this makes it easier to succumb to damage and require professional repairs.

Fuel

Gas prices are hitting record highs this year. In June, gas was $5 per gallon on average. It’s not likely that gas prices will take a dramatic fall later in the year.

What can you do? If you’re still shopping for a vehicle, choose a fuel-efficient one. A vehicle with a poor fuel economy (often called a “gas guzzler”) will force you to spend more at the pump.

So, can your budget handle these expenses? If you think it can, it’s time to start shopping