Purchasing a new car is always a great experience and owning one is even better. You no longer need to rely on public transport because you have your own car to take you wherever you need to be. As much as cars are great to have, they are quite expensive for most people in South Africa. This is one of the reasons why many people don’t have their own form of transport but there are ways for you to have your own car. The most important and helpful thing to do is to create a budget for your new purchase. That way you’re able to calculate how much your new wheels will cost you. Below are some great tips on how you can budget for your new car.

Cut back on spending

The first thing you should do when budgeting for a vehicle is to be on a tight budget. There are so many ways you can cut back on spending but the best way to do it is by cutting back the amount of money you’re spending on entertainment and take-outs each month. People, in general, spend so much money on coffee and takeouts without even realising it. Try cutting it back to one lunch or dinner with friends and at least three takeaways a month. Make your own coffee instead of purchasing it every morning because every cent leads you one step closer to the vehicle of your dreams. Next would be to look at your bank statement and see where the rest of your money is going. This does not include expenses like rent, groceries, credit card bills, etc., as those are things you need to pay. Expenses you need to reconsider are your expenses which go towards entertainment e.g your cellphone contract, gym membership, and clothing accounts. Although most cellphone contracts or gym are two-year contracts so there is not much you can do about it. But if it’s time for an upgrade, why not keep the phone you already have or upgrade to one which cost a few rands less, the same applies to your gym. You can also start settling your clothing accounts and closing ones you don’t necessarily need.

The cost of the vehicle

When planning a budget for a new vehicle you need to think of all the costs. It is always a good idea to calculate the value of your car before applying for finance so that you can have an idea of how much you will roughly be spending each month. There are many car value calculators online which you can use to determine your car's worth. When purchasing a car you should not only think of your monthly instalment, but also monthly repayments, repair maintenance, petrol, and car insurance which is extremely important. This is a good way to determine whether you can afford the additional costs of your vehicle. If you see that the vehicle you’re interested in visiting a few car dealerships and see whether you can find a second-hand version of the car you’re interested in. Or you could shop around for another car that is more affordable and suits your needs.

Save up for a deposit

One way to ensure your affordability for a new vehicle is to have an upfront deposit. You can decide how much that deposit will be and how long you plan on saving up money.  Although it isn’t necessary for you to save up for a deposit, it is really a great way for you to budget for your car and it allows you to pay a lower monthly instalment. Check your finances and see how much you’re able to save per month.

Trade in your vehicle

Vehicle trade-ins are truly great because they allow you to cut down on the cost of a new vehicle. You can use the money you got from selling your car to make an upfront payment to your lender. That is a great way of starting your loan agreement as you will have a kick-start allowing you to finish your monthly car repayments at an earlier stage. When planning to trade in your car always do the necessary research and wait till you reach your breakeven point which is after four years, that way you get more money from your trade-in.

Avoid unnecessary add-ons

When you think of owning a car there are many things which you wish you can have. Things like a sunroof, an audio system, or big wheels are nice, however, you don’t need them especially if you’re on a budget. Try and avoid things that will make you pay more than you had budgeted for and stick to things you need.

Comments

comments