How to budget for buying a New Car is sponsored by The NRMA.
Well I’ve been back on the road, in my own car, for a while now and I love it! It’s so good to have the independence to be able to drive anywhere, any time.
For so many years I relied on having my husband to drive the family anywhere. It made me a lot more resourceful when I was by myself with the kids though. I took them on public transport often but where we’ve moved to now, there isn’t even a bus stop within a 20 minute walk.
Having a car has just made my life easier but it was a big financial decision. I’ve shared with you before why I decided on the model of my car being right for the family. Now I thought I would share some of the financial implications we had to consider as a family before we made the purchase. I’m not a Financial Advisor, this was my personal experience.
If you’re budgeting for buying a new car yourself, bear these things in mind:
How to budget for buying a New Car
1. How much can you afford?
There is a big difference between what you have to spend and what you can actually afford.
One thing I did not want to do was leave myself short financially. Whilst I had some savings, I decided to purchase my car with a car loan. It gave me peace of mind in spreading the cost and having a manageable weekly payment to make over a set period of time.
I worked out a price that I could afford to spend each week. My longer term plan is to be able to pay the car loan off early but right now, this is working well for our finances.
2. Will there be any unexpected costs?
When calculating your total costs, bear in mind that there might be additional costs to factor in.
Just because a car is advertised at a certain price, that price might not include some of the extras you want like metallic paint, ABS and more.
3. How much will the car cost to run?
Take some time to work out how much fuel you are likely to use each month and calculate how much that will cost.
Check the price of car insurance too. A vehicle within your price range can quickly become an impossible option if adding the car insurance doubles its cost.
Also check with the dealer if the car comes with any service or maintenance packages. If not, these costs will need to be added to your list.
4. Will the car lose or retain its value?
Of course as soon as you drive a new car off the forecourt, you’ve lost a chunk of its value instantly as it becomes a ‘used’ car.
That said though, I chose a car that I knew was a popular model and would return some value. In the next few years, I might like to upgrade the car to a newer or different model. I’m hopeful that I will be able to get a good price in a part-exchange deal because of the model I chose.
5. How will you pay for the car?
As mentioned I chose to go with a car loan when I purchased my car. It was important for our family to keep our savings intact for other reasons.
The NRMA has a range of car loans that could help make an informed decision when you’re purchasing a car.
Their Car Loan Calculator is an easy to use tool. If you know how much the car you like costs, the calculator can work out your monthly payments.
Buying a new car is a big commitment. It’s worth taking the time to think about all of these costs and how the purchase is going to affect your family’s budget.
Do you have advice on how to budget for buying a new car?