How to Budget for a New Car
After a house and maybe a family vacation, purchasing a car is one of the most expensive purchases that many of us will ever make. Even a second-hand car can set you back several thousands of dollars.
When you decide to upgrade your car, you have two finance options. You can either purchase it outright and pay the total price of the vehicle on the day of purchase or you can choose a monthly repayment plan.
Regardless of which finance option you choose, you will still need to budget effectively. As long as you have chosen a car that is within your financial reach, creating a budget will ensure you are never short on money in the future.
Here are some top tips to help you budget for a new car.
Use An Online Car Payment Calculator
Using an online calculator to estimate the total costs and monthly repayments of your new car makes it easier to create a budget. You can break down your expenses to see how much you’re going to spend each month on your vehicle.
Vehicle prices, insurance premiums, and road tax costs vary depending on where you live so you will need to find a car payment calculator that is relevant to your area of residency. For example, if you live in Salt Lake City, use a Car Payment Calculator in Utah so you can get accurate financial estimates.
Check Insurance Prices
Insurance policies are one of the most expensive ongoing costs of being a driver. Take a look at the average price of insurance for the model of vehicle that you are purchasing.
Compare the prices of multiple different providers to get an average. Depending on the level of experience that you have as a driver, your age, and whether or not you have had a previous claim, the insurance might vary. However, comparing different insurance policy prices will enable you to budget more effectively for your new vehicle.
Consider Fuel Economy
Different vehicles have different fuel economies, meaning they use varying amounts of fuel to run. When buying a new car, consider the fuel economy so that you can estimate how much you’re going to spend on filling up the tank each month.
Whether the vehicle has a petrol or diesel engine will impact its fuel consumption, as well as the size of the engine and your driving technique.
Servicing
Most of us expect a new car to be fully functioning and fault-free. No matter how much you properly care for your car, it will still need to be serviced on a yearly basis to check for damage or hidden safety hazards.
The price of a car service varies depending on the model of the car, the garage that you go to, and whether or not anything needs fixing in the vehicle. This is something that you will need to include in your budget alongside the price of the car and your annual insurance premium.
