Buying a new car is exciting, even when you’re doing it because it’s a necessity. If you need a car to get around, or you just find it more convenient, you don’t want to spend too much on buying or running it. Even if you’ve owned a car before, you might not have had to properly budget for one before. If you’re now ready to move onto another car, either out of need or want, you can take the chance to learn how to budget properly and what you need to think about. Here are some things to keep in mind when you create your budget.
Lump Sum or Monthly Payments?
There are generally two ways you would pay for a car. You will either get it financed, which involves making an initial payment and then paying offer the rest in monthly payments, or you’ll pay in one lump sum. You’re more likely to pay a lump sum if you’re buying a used car, but you might also pay for a new car in cash if you’ve saved enough. How you’re going to pay is important to consider because it means taking into account your savings and your monthly expenses.
See What You Can Get for Your Current Car
When you’re looking for a new car to follow on from your current one, you might consider how it can help you pay for your next one. If you use a Value My Car calculator, you could find out how much you could get if you want to do part-exchange. Many dealers will take your car off your hands for you and take the value off the price of your car to make it more affordable for you. However, you could also sell your car yourself if you think it might get you a better deal.
Take a Look at Your Income, Spending and Savings
Of course, you also need to run some numbers concerning how much money you having coming in and how much you can afford to have going out. If you don’t already have a monthly budget, it’s a good idea to create one so you can take a close look at your incoming and spending. This will help you to see how much money you have available each month. Remember to look at your savings too, especially if you’re planning to buy a car outright instead of making monthly payments.
Don’t Forget Running Costs
It’s important to remember that your car will also come with monthly costs. Even if you buy a car outright with no monthly payments, you also have to think about fuel costs, tax, insurance and maintenance costs. These are essential costs to take into account, and it’s important not to underestimate what you might be paying. Don’t just consider your costs during the month but also across the year. Repairs might not be a monthly cost but they will crop up.
When you budget for your next car, think about all of the costs that are involved to get it right.
*This is a collaborative post.