Buying a car is a huge investment; for many people, it's one of the most expensive items they own, apart from any property. You can purchase a car for as little as £1,000 or as much as several billion pounds. When making the decision of how much to budget for your car, there are several things to take into account. In this article, we take a look at how you can choose the right car budget.
How much do you care about cars?
For some people, cars are just a way to get to work and back; for others, a car is much more than that, and having a good car is really important for them. If you’re a person that’s passionate about cars, you may want to increase your car budget so you can buy something that appeals to you. If you’re only looking for a practical vehicle and don't care about the make or model, then your budget can be much smaller.
How much money you earn
The amount of money you earn will change your car budget; your monthly payments need to be affordable. If you stretch your finances too far, you may need to give up other things you enjoy, or you could end up missing payments, which could result in your car being taken away. If you plan to buy your car outright, your budget will be the money you have available. You shouldn't spend all your money on your new car, so keep some money aside for emergencies. Work out how much you spend on essentials and other things you purchase; any money left over can be allocated to your car payment. Whenever you’re budgeting, always leave a buffer for unexpected costs.
Car insurance and tax
Your car budget will need to take into account the cost of insurance and tax. Before choosing a car, make sure you look at how much these things cost. If you don’t have much experience driving, the cost of your insurance will be much higher, especially for an expensive car. Car tax also varies depending on vehicle emissions, so make sure you check this before purchasing a vehicle.
Car safety features
High end cars and newer cars will have more safety features compared to older models; this could include advanced technology such as self-driving features and more cameras to assist with parking. Newer cars are more expensive than older vehicles, so you may need to adjust your budget to account for these features. If safety features are important to you, a newer car would be better suited for your needs.
Cost of car parts
Although you don’t want to think about things going wrong when you buy a car, it's inevitable that you’ll have to make some repairs in the future. Even if it's just changing parts, such as tires that wear down over time, the cost of replacing a part on a Ford Fiesta will be much lower than the same part on a Porsche 911. You need to consider the ongoing maintenance costs of the car you’re buying and the cost of replacing any parts if things go wrong. This may alter your budget if you’re not prepared to spend lots of money on buying expensive parts in the future if things need to be replaced.
The location where you live
If you want to buy a very expensive car, you’ll need somewhere safe to store it, such as a secure garage. Your car will be at high risk if you live in an area with a high car theft rate. Buying an expensive car might be a bad choice in this situation, and you could benefit from a cheaper car until you move to a lower crime rate area. Your parking options will also influence your budget; if you only have on-road parking, your car is more likely to be damaged; a driveway will keep your car safer. Those without driveways might choose a lower-budget car due to the increased risk of damage.
All of these factors may influence your car budget, but the most important thing to consider is your ability to afford the monthly payments, insurance and car tax.