As buying a car is a major purchase, it is best to consider different factors when deciding which one fits your budget. Make sure to focus on the financing cost, down payment, interest rates and other extra charges.
Read on to learn more about creating a car budget and saving on your next purchase:
Monthly Payment and Down Payment
Before car shopping, figure out how much you can afford. Know how much you are willing to put down as initial and monthly payments. Monthly payments should not exceed 10 per cent of your monthly net income.
Budget for Extra Fees
On top of the car’s actual sale price, take into account the taxes and other charges associated with buying a vehicle. Keep in mind that you also need to pay for the inspection, stamp duty and transfer of registration. Saving money several months before the purchase can help you secure a car loan in advance.
The Car Choice
The style and model of the car you want to buy will also affect your budget plans. It is advisable to prepare a list of your vehicle needs and work out which car is right for you to avoid costly repairs or modifications in the future. If you are mostly driving in the city and want to save fuel, going for a small car is a smart move. You can also consider a second-hand car with good resale value.
Moneysmart.gov.au and pickles.com.au suggest buying a car at an auction to save money. Learn about the conditions of bidding at the auction home. Some ask for a 10 per cent deposit and payment of the remaining balance within a short period.
The amount of your existing vehicle can have a big effect on your car budget. Get a detailed car valuation to determine how much your old car is worth. You can try selling the entire car properly or just some of its parts. Once you have sold the vehicle, you can add the money for your car budget.
Know your maximum allowance to help you stay on target. Stick to your maximum budget and do not be tempted to go over it.