Buying a car can be an exciting adventure, but you can’t get so swept up in the fun of it all that you end up making irresponsible decisions.
A car is a big commitment, and it’s bound to cost you a lot of money, which is why you need to ensure that you are financially prepared for this step. The best way to do this is to set up a proper budget for your car. And if you’re not sure what to include in this budget, then keep reading.
Warranty & Insurance
We know it’s no fun to spend money each month on your warranty or insurance, but your future self will thank you. After all, if you have a warranty or insurance and your car gets damaged, you likely won’t need to pay as much money for the repairs, so it truly is the responsible decision.
Of course, you will need to research things like which warranty and insurance will be best for you. Start by asking yourself questions like “what do I need from my insurance?” and “are extended car warranties worth it?” as these will likely help you make the best decision for your current situation.
Aside from the car itself, you will likely spend the biggest portion of your car budget on gas. Unfortunately, gas just isn’t as cheap as it used to be, and gas prices are rising all the time.
While you will, of course, need to pay for gas in order to use your car, you can look for cars that use less gas. Doing some research could help you find the most affordable cars in terms of their gas usage. You can also save some money on gas by walking or carpooling now and then.
You will need to get your car serviced regularly. Sometimes, a car comes with a service plan, which is great. But if not, you need to make space in your budget to ensure that you can afford to have your car serviced when the time rolls around.
Luckily this isn’t something that happens very often, so if you can put away a little bit of money each month, you should have enough to cover your car’s service.
Even if you do get your car serviced, you should still perform maintenance tasks like changing your oil when it’s needed.
Buying a car in cash is always a financially smart decision, but it’s not one that many of us can afford. This means that most people need to take out a loan.
However, you need to remember that you will pay interest on your loan, which means when you add up the repayments, it will end up being much more than the car itself. So, be sure to keep this in mind when setting up your budget. You should also consider different types of loans, like a digital loan, for example. And if you can, try to put down a decent deposit on the car as this will help you to have a smaller repayment.