Whether you feel you need a new car because your current vehicle keeps breaking down, battles to start, or is simply an old model that’s no longer safe or reliable; it’s essential to buy a new car that you can afford.
There are several costs associated with owning a vehicle, so you will need to budget for a lot more than the purchase price.
So, we’ve listed some tips for you to ensure you really can afford the vehicle you’re after, whether it’s the Honda Civic R Sportline or a new electric model.
Calculate Your Repayments
If you’ll be relying on vehicle finance to purchase your next vehicle, it’s crucial to know what the repayments will be. You can use a finance calculator to calculate how much finance you can afford.
Calculate Auto Insurance Costs
In addition to vehicle finance repayments, you’ll also need to budget for auto insurance premiums. Auto insurance is vital for all drivers as a fundamental form of financial protection for vehicle owners.
Even though there are ways to lower car insurance costs, like being a safe driver, installing a tracker, parking in safe locations, and avoiding lousy driving habits, you will still need to consider this cost as a relevant bill attached to owning a car.
Consider Fuel Efficiency
Fuel costs are another ongoing expense for vehicle owners. And because different vehicles have varying fuel consumption ratings, some cars are a lot more expensive to drive than others.
When shopping around for a vehicle, be sure the model’s fuel consumption suits your budget.
Know Maintenance And Repair Costs
It’s a lot cheaper to maintain and repair a golf GTI than it is to maintain a luxury Mercedes-Benz S-Class. So, it’s fundamental to know the relevant maintenance and repair costs before purchasing a vehicle, whether it’s new or used.
If you can’t afford these costs, you’ll find yourself in a pickle when your vehicle is due for a service or when it breaks down.
Disposable Income
Lastly, when figuring out if you really can afford to buy the car you’re after, it’s essential to determine your disposable income. To get your disposable income, you must minus all your current expenses from your income after tax and deductions. The amount that’s left over is what you can spend on luxuries or credit repayments like vehicle finance.
If all the costs of owning a car can comfortably fit into your disposable income, then you can rest assured you’ll afford a new vehicle. At this point, you can start browsing vehicle listings with auto dealers to find vehicles within your price range.
With that said, once you have accurately determined your affordability, it’s also worthwhile to find effective ways of increasing your chances of vehicle finance approval. Before applying with lenders, be sure your credit score is high enough. Other ways of increasing your chances of approval include saving for a down payment and eliminating debt and credit usage.
