Our budgets are tighter than ever, so when it comes to buying a car, you need to put a lot of thought into your purchase and know what you can afford.
So, if you are on a budget, but need a car then here are our top tips for buying a car on a budget.
Put the Budget on Paper
When it comes to budgeting, you can’t just try and work it out in your head. You need to put it down on paper and use a calculator. Write down all your expenses and your income to determine how much you can afford each month. You will also need to factor in fuel, insurance, maintenance and extra costs that might pop up.
Once you have it down, you will have a better idea of what you can afford.
Brand New or Pre-Owned?
Once you know what you can afford to spend on a vehicle, you can make the choice between buying a new car or a pre-owned vehicle.
With a new car, you will receive the maximum extent of a warranty and a service/maintenance plan. However, new cars are pricy even if you do manage to get a deal or a trade-in.
If you go for a pre-owned car, you will score a significant saving as the first buyers will have absorbed the biggest depreciation. Also, you will have more choice and get more car for your budget. You can usually get cheaper insurance premiums as well. However, be cautious, thoroughly check the vehicle, find out about warranties and only buy from a reputable dealer or individual.
Use Your Head
You need to be practical and use your head. Make a list of requirements whether it’s a spacious boot, off-road capability etc and leave the luxury extras off the list.
When you know what you are looking for, it can make the car buying process easier.
It is a good idea to shop around and with the internet that is even easier. You can browse hundreds of listings online from reputable dealers and when you find the one you want, just contact the dealer.
With a new car, your budget will only stretch so far and you may have to settle for basic features. If you opt for pre-owned, your budget will go further and you might be able to get a car that has everything you need plus a few extra luxuries that you want.
Always Do Your Homework
When it comes to buying a car, you can’t make a mistake. Research, research and research. You need to research the car you are interested in, different offers, take test drives and ask about any specials.
If you own a car and want to use it as a trade-in, then you will need to find out what you can get for your vehicle.
Consider the Insurance
Your car buying decision will also be influenced by how much the insurance will be. Insurance premiums are determined by a number of factors like the make, model, age of the vehicle and so on. You should get a few insurance quotes for the vehicle you are interested in, so you have an idea of what you will pay.
If you are going down the pre-owned route then you will find used cars that are still under warranty. If you decide to get a used car then try and find one that still has a good chunk of its warranty and service plan active. If you can’t find what you are looking for then speak to the dealer about purchasing a warranty for the vehicle.
Even though we would like to buy a car cash, it is not always possible, which means we will have to use vehicle finance. Many dealers will assist you with vehicle finance, but shop around a bit and find one with a short-term repayment plan with a low-interest rate.
Be cautious when considering balloon payment. Your monthly repayments might be less, but you will end up owing a large amount at the end of the term.
You can bring down your monthly payment by opting to make a deposit of 10% to 20% of the purchase price.
Avoid the Extras
If you have opted to buy a new car, then be wary as it can seem very tempting to add extras like a sunroof, bigger wheels and so on, but when the time comes to sell, you won’t get your money back for these and all they do is push up your monthly instalment.
If you want these extras then it is best to go pre-owned and find a vehicle in your budget that has some of these extras already. Pre-owned cars are more affordable, you have more choice and you could get those extras within your budget.
Buying a car is a big purchase, so take your time, do your research and shop around to find the best deal that suits your wallet and your needs. You can start your car buying journey at Café Wheels.