Buying a new car is an exciting rite of passage – but it can also be very expensive.
As prices rise, it is important to know how to budget – and we have put together all you need to know to budget for your first car, as well as the extra costs that can come with this.
How Can I Budget For My First Car?
If you are buying your first car, it’s likely you will want to save up for it. But saving money isn’t always easy when you are starting out in life. So, here are some tips on how to budget for your first vehicle:
1) Start Saving Small Amounts As Soon As Possible
The best way to start saving for your first car is by setting aside small amounts from each pay cheque. This may seem like a long way of saving, but little and often can help you reach your goals faster.
A savings account is one of the most effective ways to build wealth. You should set up a savings account at your local bank or credit union, and deposit any spare change into it. If you don’t have access to a bank or credit union, you could try opening a high-interest online savings account instead.
This will ensure that you have enough cash to cover your monthly payments, while still allowing you to earn interest, and will allow your money to go further.
2) Know Your Budget
One of the most important parts of your journey to a new car is to know your budget – this will allow you to calculate exactly how much spare cash you have, and what you need to do to make sure you can afford your dream car.
Having a firm grasp of exactly how much you have to spend will also help you avoid spending more than you planned, and ensure that you can meet the costs of a car once it is purchased – this includes costs such as insurance and repairs. It’s a good idea to keep track of your expenses using a spreadsheet, so you can see where you are going over budget.
3) Consider Financing Options
Financing options are available for those who cannot afford to pay for their car outright. There are a range of financing options available, including leasing and hire-purchase. Various car finance with no deposit options are available, making this a great way to get your hands on your dream vehicle.
Leasing allows you to borrow money over time, which means you only pay back the amount you borrowed, plus interest. Leases usually last between three months and five years, depending on the type of lease you choose.
Hire-purchase works similarly to leasing, except that you buy the car outright, and then repay the loan over a period of time. The length of the contract depends on the type of finance deal you choose.
When choosing car finance, make sure you are aware of the key factors, such as APR (Annual Percentage Rate), term and mileage limit.
4) Shop Around
Once you have decided on the type of car you would like to buy, it is time to shop around. Shopping around will give you a better chance of finding a great deal, and getting the right finance package for your needs.
You should be able to find plenty of information about finance deals online, and there are several websites dedicated to helping people compare offers. However, if you prefer to talk to someone face-to-face, visit your local dealership. They will be able to provide you with all the details you need to get started.
5) Research Insurance Costs
It is imperative that you research the cost of insuring your car before purchasing it. Different insurers offer varying levels of protection, and some policies include additional benefits such as breakdown assistance.
By having a good understanding of this cost before you purchase the car, you will be able to plan ahead and save money in the long run, as well as ensure that you choose a car that you can afford to insure without issue.
Remember to shop around for insurance providers – they may not always be the cheapest option, but they will be the best value for money.
6) Choose A Vehicle That Fits You
Choosing a vehicle that fits you is one of the most important elements of buying a car. You need to make sure that the car you choose suits your lifestyle, and that it is comfortable enough to drive every day – as well as being something you will be able to afford to insure.
Buying a car is an exciting experience, but it can also be stressful. By following these tips, you will be able to enjoy the process, budget appropriately, and enjoy the best car for your needs.