For many, one of the first large investments they make in their life is purchasing a car. Making the decision to buy a car is a big step, as you are not only taking on the expense of purchasing it, you are also taking on all of the expenses a car brings to the table, including car maintenance, car insurance, and gas, among other things.
However, owning a car and learning how to budget for it each month is an important skill to master. Whether you are a teenager saving up for your first car, or are an adult ready to trade in your old college car for a new professional one, here are some simple ways to budget for your new car.
Pre-Owned or Brand New
First of all, when deciding how to budget for your car, determine if you are looking for a pre-owned car or a brand new one. Narrowing down your budget can help you narrow down your search options and find a suitable car in your price range.
If you are looking for a brand new car, calculate how much you are willing to spend on car payments each month. Depending upon what car you are considering, your payments can vary significantly. A sportier, flashier car typically is more expensive than a sensible sedan. Moreover, the more features a car has, the more expensive it will be. While some of the added bells and whistles can feel luxurious, they can raise the price of the car significantly.
When setting a budget for your car, make sure to factor in the maintenance expenses. Car maintenance repairs can be as small as changing a flat tire to something larger, such as using Pinnacle Auto Glass to repair a broken windshield.
One of the most difficult aspects to budgeting for maintenance repairs is how unexpected the repairs can be. Accidents and other maintenance problems can appear suddenly, and depending upon how severe, can cost more than you allotted in your budget. While there is no way to anticipate an accident, it is a smart idea to budget a little more each month for your car than you might expect. If the money ends up not being used, it can either go into savings or can be applied to the next month’s budget; however, if you do have a surprise repair, the added money in your budget can offer you a much needed buffer.
Car insurance prices can vary greatly based upon a variety of factors. New drivers often have higher insurance, as many insurance companies want to make sure the driver is not a liability. Moreover, bigger or more expensive cars often cost more to insure. Additionally, if you get into a a car accident, most insurance companies will raise their rates. In the event the accident was not your fault, you may be able to avoid having your rates raised.
When looking for insurance, make sure to research and shop around first, in order to find an insurance company that not only fits within your budget, but also is extremely easy to work with, as there may be times when you need to speak with an agent about an insurance problem.
Keep in mind that when it comes to insurance, in some cases, you get what you pay for, meaning that an inexpensive, no-name company might not offer you the best customer care and support as a well-respected company might. Sometimes, it can be worth it in the end to pay for a slightly more expensive insurance in order to ensure good customer care.
Lastly, when it comes to insurance, certain companies that insure more than cars often offer discounts to customers who use them multiple insurance purposes. In some cases, it is an efficient way to save money and get the coverage you need.
Stay on Budget
It can be easy to create wiggle room in the budget that actually does not exist. When buying your first car and anticipating the possible expenses, be strong and stick to your proposed budget. While owning a car is an asset, if you purchase above your means, you could wind up in debt and struggling to make the necessary payments.
Being responsible and purchasing a first car is a big step, and these tips can help you create a feasible budget for your car.
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