Whenever you make a big purchase, it’s a good idea to create a budget. You should know how much you’re able to spend so that you can ensure your purchase is affordable. When you want to buy a new car, it’s not just the cost of the car itself that you need to consider in your budget. It’s also important to think about the other expenses that owning and operating a vehicle incurs. There are multiple costs involved in running a car, including fuel, insurance, and maintenance. All of these expenses shouldn’t be ignored if you want to be sure that you’re not stretching your budget when you buy a new car.
If you’re budgeting for a new vehicle, here are the things that you need to include in your budget.
Save a Downpayment
Just like if you were going to buy a home, having a downpayment for a car will allow you to pay for part of it and borrow the rest. The more you can put down for an initial payment, the better the interest rates you’re generally going to be able to get. Plus, if you have a larger downpayment, you’re going to have more buying power when combined with what you’re going to borrow. Of course, you could also save enough to buy a car outright if you wanted to but it would be tough if you want a more expensive car.
Find Out How Much You Can Borrow
Using financing to buy your car is probably going to be necessary if you want to spend more than a few thousand. If you’re buying a brand new car, it’s likely to be much more manageable if you’re able to pay it off over time. If you’re not sure how much you’ll be able to borrow, try using a site like Carmoola that can help you to work out your budget. You can just plug a few things into a calculator and get a good idea of what price range you should be looking at. You can even pay for your car online or use a dedicated car once you find the one you want.
Check Taxes and Fees
You’ll need to pay some taxes and fees when you buy a new car, and some of them will be payable as soon as the car is in your hands. You might need to pay a registration fee when you register your car. You might also have to buy a car tax or road tax of some kind on your vehicle. In some locations, such as cities with a lot of traffic, you might need to pay a congestion tax or something similar. Another cost to consider might be toll road charges that you have to pay on any roads you regularly drive.
Work Out Fuel Costs
Your fuel costs can’t really be predicted in an entirely accurate way. You can’t know if fuel costs might go up or down, so you can only work with current prices. However, you can also consider a worst-case scenario and work out if you could still afford fuel if prices go up. You should also have a good idea of how many miles you’re likely to drive each month. As well as taking into account things like your commute, grocery shopping, and other errands, don’t forget to think about less frequent journeys like road trips.
Consider Maintenance Costs
Taking care of your car is also part of keeping it running. You need to clean it regularly and take care of maintenance to keep it on the road. You’ll have to think about a variety of expected costs, as well as the unexpected costs that you could face. You know you need to clean and service your car and carry out jobs such as changing the oil. However, you should also account for any repairs that might need to be made.
Calculate Insurance Costs
Insuring your car is a must to protect you while you’re on the road. You can get different types of insurance that will provide you with different types of coverage. While you could pay less for less cover, that could come back to bite you later. Comparing your options can be the best way to find the best deal. Make sure you look at how much your premiums are and how much you’d have to pay before your insurance pays out.
Budgeting for a new car will help you to avoid spending what you can’t afford and make it easier to manage money in other parts of your life too.
