Buying a new car is expensive, so whether it is an upgrade to replace your current car or your first vehicle, you need to budget carefully to afford your new ride. If you can’t afford to pay cash for your new vehicle upfront, then you need to obtain a loan to finance the purchase. Here’s what you need to know to budget properly for a new car.
You’ll Need Insurance
By law, every driver needs insurance. You could be fined up to $1,000 or spend up to 12 months in jail if you’re caught driving without insurance, so it is a necessary expense. You need it to help pay for damage if you are ever involved in a car accident. If you’re worried about how to afford an insurance payment each month, there are many ways to find affordable car insurance. Start by speaking with an agent to see if you qualify for any discounts and look into 12-month auto insurance policies to see if they are a better fit for your budget.
You’ll Have a Monthly Payment
Financing a vehicle breaks down the total cost into manageable monthly payments. You’ll find out how much your monthly payment will be when you start the purchase paperwork at a dealership, but it is always a good idea to go into the situation with a range in mind. Spend a few months tracking your spending habits and determine how much you can afford to spend on a car payment each month. Have a number in mind that will allow you to live comfortably. You also need to know your limit so that you don’t go over it.
For example, you may know that you can continue living your normal lifestyle if you pay $400 a month for your vehicle. Paying $500 a month may completely blow your budget so you can’t afford other necessary expenses. Try to negotiate for a monthly car payment that falls into this range.
You’ll Need Maintenance and Repairs
Being a responsible car owner means keeping up with routine maintenance. Inevitably, you will also need to pay for car repairs when your vehicle breaks down. The older your car is, the more likely it is that it will need major repairs to keep your car running smoothly. You can’t always foresee these expenses, so it is a good idea to have some money set aside in a savings account to cover repairs. You don’t want to ignore car problems until they render your vehicle unable to drive, so make sure you have money set aside for repairs when you need them.
If you’re wondering if you can afford to buy a vehicle, you need to think about more than the initial cost. There are numerous elements that go into being a good car owner, and if you want to get the most out of your investment, you need to keep your ride in good condition. Make sure you budget for these three things before you decide if you can afford to purchase a car.
Kat Irving is a reporter for Diving Daily. After graduating from NYU with a master degree in history, Kat got an internship at WABC-TV New York and worked on profiling local businesses. Kat was also was a columnist for the NPR. Kat mostly covers business and community events here at Diving Daily