If you need to buy a new car, either because you have just passed your driving test or you need to replace a failing automobile, then you may be wondering how on earth you will be able to afford it. However, if you plan well, you may just find that you can afford the car you want, even when your finances are not as good as you would like.
Forward planning
The first thing that you need to establish is your budget. When fixing your budget for a car, do not think that you only need to work out the purchase price. This is just the tip of the iceberg when it comes to how much buying and maintaining a car will cost. You will also need to factor in gas, insurance, servicing, and taxes.
How much money you have to allocate monthly to your new car will depend on how you intend to purchase it. For example, if you plan to make an outright purchase, then you may only need to factor in the annual insurance and tax, with a monthly gas cost. If, however, you need to take out some form of finance to pay for the car, then you need to work out how much all of it will cost on a monthly basis and how long the payment period will last. Perhaps the quickest and easiest alternative to an outright purchase is to take out an auto loan, whereby you have the use of the car, but you pay for it with monthly installments over a set number of months. This method makes your ideal car that much more affordable and your budget easier to calculate.
You should also take note of seasonal price drops. For cars, these often occur toward the end of the summer months and heading into the fall. At this time, the previous year’s models, except those that are perennial favorites, are being marked down in price so that they get sold and make room for the next year’s models. Salesmen are also often keen to make sales, even discounted sales, at this time in order to make their quota, so if you can wait until this time and the model you have chosen is not high in popularity, do so to save some money. Do not be afraid to negotiate on the price either.
Unless you are set on an exact specification, never consider a new car to be your only purchase option. In fact, you could be making a serious mistake in buying new as the moment you drive it away from the dealership, you lose money in depreciation. A six-month-old car or even a two-year-old car will still have plenty of mileage left in it and will cost you perhaps half or even a third of the brand-new price.
In order to make the most of your finances when buying a car, wait for car prices to drop a little, work out whether a finance option will make the cost easier on your pocket, and opt for a preloved car that is just as good as the latest model.
