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Top tips for determining your car budget

car budgetcar budget
car budgetcar budget

 

Top tips for determining your car budget

Everyone wants to own their own car. Asking for a lift or borrowing a vehicle from family members or your significant other can get tiring. They have their own lives to live which can sometimes clash with your needs.

For some, cars are a luxury, a want, but for others, it’s more of a need. Either you have to travel quite far to get to work or you have to drop your children at school. Regardless, the problem comes down to one thing: cars are too expensive.

Which is true, cars are quite expensive especially if you don’t have the money to buy one. Like most South Africans the only way you can purchase a vehicle is through vehicle financing. Luckily, this isn’t impossible to achieve since there are many lenders who can offer you an affordable loan amount.

If you’re planning on buying a car but are wondering if you can afford it, read these top ten tips on how you can determine your car budget.

 

Look at your expenses

The first step to get your own car would be to look at your monthly expenses vs. income. Once you do that, only then can you work out how much you can afford on a vehicle. Write down all your expenses such as rent, groceries, credit cards, clothing accounts, water and electricity bills, cellphone contracts, wifi and other debts you might have.

Calculate how much money you have left, then calculate how much money you spend per month on recreational activities. Activities like movies, dining out and spending time with friends and family. The money that you have left will determine if you can afford to purchase a vehicle. While looking at your budget you should also think of the price of petrol, car service, insurance, and car repairs.

When you purchase a vehicle you won’t only pay your monthly instalments, you would also need to pay for add ons so keep that in mind.

 

Try to pay up some of your debt

Once you have seen how much your monthly expenses are you can start looking at your debts and which ones you could settle first. Paying off your small debts will allow you to have more money for your car.

You won’t be able to tackle all of your debts at once or pay off large amounts. But with paying you small debts you are boosting your credit score improving your chances of getting financed. When you reduce your debts you will also be able to purchase a car and still have money on the side to go on memorable adventures with your friends and family in your new car.

 

Visit a lender

We are all aware that vehicles are quite expensive. Going to a lender would be a good idea as they can inform you on what the best car purchase price option is for you. Many lenders can determine your car budget by using a purchase price calculator for a car which will offer tell you how much you could afford.

 

Cut back on your wants

The next step would be to cut back on your wants. If you paid up most of your debts then you won’t need to do as much cutting, allowing you to still have fun. There are a few things you can cut back on, like unsubscribing from things that take small amounts of money, because they add up.

Try to minimise the use of credit cards and clothing accounts as these are items that likely want and not needs. By doing this again you will have more money to add to your dream making it easier for you to determine your car budget.

 

Save up for an upfront payment

It would be helpful if you would save up on a deposit. Having a deposit can show lenders how well you keep your finances and that you have the intention of paying your loan amount. A deposit can also help lower your monthly instalments and lower your loan amount. This is a great way to budget for a vehicle.

 

Research affordable cars

Doing your research is a great way of finding a car that you can afford. Make sure you visit different online platforms that talk about cars, that way you know which cars are affordable and won’t break your budget.

 

Shop around for different deals

One common mistake car buyers make is that they only look at one dealership. You won’t find the best deal if you only look at one car dealership. Look at car deals online so you can find one that fits your budget.

 

Opt for second hand

If you are on a budget, the best thing to do would be to purchase a second-hand car. By purchasing a used car, you get value for money, as the car value has gone down because of depreciation. There are plenty of good previously loved vehicles available for you.

 

Trade in your old car

If you have your own car, you could trade in your old vehicle and use that money to pay for a new vehicle. With trading in your car, you would have already paid a large amount for your second car which will bring down your instalment. This is a great way of purchasing a car on a low car budget.

 

Avoid optional car extras

Not every car add-on that a dealership offers you is necessary. Having extras added to your vehicle might seem like a good idea in the beginning, but you need to decide whether you need them or not as some add-ons might increase the price of the car. Because no-one really needs a car with a sunroof...

car budget