It’s easy to lose track of car loan payments and end up spending more than you can afford. Here’s how to stick to your budget when buying a car so that you can avoid going broke. Special Interest Automobiles Cambridge Ontario has a guide to help you with your new or used car purchase.
Define Your Budget First
When buying a new car (or a used car), you need to be realistic about the amount of money you can afford to spend. You should make a list of your income, expenses, and liabilities. The list will help you determine your budget needs. Don’t forget that owning a car is not a once-off payment. There are also certain taxes and fees that come with buying a new car. Can you afford this within your budget? Other prices to include in your budget are costs for insurance and maintenance of your vehicle.
If your expenses exceed your income, consider options such as finance options from your dealer or monthly car loan payments from your bank. Remember that if you’re taking out a loan, you need to account for the cost of interest on the loan. You may also consider saving costs when possible by eliminating unnecessary expenses, such as the costs involved with dining out and weekend trips, and then recalculate your budget. Speak to an accountant or personal banker if possible to help you out with your saving accounts and to help you to stick to a budget to avoid going into debt.
Calculate the True Cost of Owning a Car
As mentioned, there are several expenses to consider in place when purchasing a car. You need to do your research upfront and calculate how much you have vs how much you can spend on car expenses. Expenses include maintenance, car insurance, gas, etc. Look for the best insurance deals and insurance premiums you can get, or ways to save money before you take the plunge. Your car payments should be no more than about 20% of your monthly income. Many choose finance options for a maximum of 4 years towards a monthly payment while paying around 20% on a down payment to avoid going into debt.
Define Exactly What You Need and Want
Sometimes you cannot get your dream car but you can still get a perfect car within your price range. You need to be realistic over what you need vs to want you want in a car. A dealership is the best place to shop around for a new car or used car within your budget. Buying a used vehicle will help you to get the wheels you need while saving up for a new car (or your dream car!) for the future. Speak to the dealers about a car loan and car payment options if you are looking to purchase a used vehicle.
At SPECIAL INTEREST AUTOMOBILES, we know it’s hard to find a good used vehicle; even if you think you found the perfect one, you can’t be sure that everything is in working order. That’s why we make it easy for you. Our professional dealers are very welcoming and are ready to offer you the best value vehicle for your money so that you can leave satisfied with your new, used car.
For more help on how to stick to your budget when buying a car, contact us today!