Buying and maintaining a car is not cheap. Depending on the car model you have, the expenses for owning one will take up a significant amount of your budget. It might even be one of the most expensive items next to your mortgage or rent.
Even when you’re financially prepared, there may be times where you can’t afford to fix it, so you have to leave it at home or drive it in a less than optimal state. Or worse, it gets repossessed and all those payments can’t be taken back.
You want to avoid any of those situations. That’s why being able to allocate money properly for your car is important. Here are some tips on how to budget for your car.
Buy a car with affordable payments
You’ll be making these monthly payments for a while. You want to make sure you’re able to pay them on time, otherwise it will damage your credit score. A general rule is to only buy a car with monthly payments that don’t exceed 15% of your monthly income. Remember, you’re not just paying for your car itself. You’ll also have other related expenses such as insurance, gas, maintenance, repairs, parking, etc. You can go as high as 20% but make sure to factor in an additional 5% for those other related expenses.
Consider buying used
There’s no shame in buying a used car. In fact, most financially well-off folks will tell you it’s one of the smartest things you can do with your money. Cars depreciate incredibly fast. The moment you take it out of the dealership, it’s already losing its value.
With used cars, you pay drastically less but still enjoy the benefits of a well-functioning car. You’ll be surprised by the impressive selection of used cars near your area. The best part is it won’t cost as much used as it did brand new.
Set aside money every month
This way, you won’t be surprised by a huge bill when it’s time to get your car checked. Basic maintenance can cost $700 a year or more. One way to lessen the burden of this expense is to put aside money each month. Let’s say you do end up paying the full $700. That means every month you only need to save $58. It’s not much but it’ll give you some relief when the time comes to bring your car into the shop.
Don’t forget tires
Tires are what connect your car to the road. They go through a lot of wear and need to be replaced at least every six years. The cost of replacing a whole set isn’t cheap, but if you buy quality tires, you won’t need to replace them until their expected wear date. Our selection of quality, but affordable tires is quite substantial.
The cost of owning a car can be overwhelming. It feels like the bills never end. But a car gives you the freedom to go anywhere, anytime you want. Provided you follow the tips we’ve shared, you should be able to breeze through those hefty payments and still enjoy driving your car.
What steps are you taking to ensure you can financially afford your car? Share your thoughts with us.