How to Buy a Car on a Tight Family Budget
In today’s economy, it can be hard to fit a new car into a tight family budget. You’ve got bills, a mortgage or rent, groceries and all those unforeseeable expenses that come with having a family.
So what do you need to do before you purchase a new or used car? Here are our top tips:
Know your budget
The first thing you need to do when you decide to buy a new car is to come up with your budget. Decide how much money your family can afford to spend on a down payment, the monthly loan repayment, maintenance/running costs and insurance. Can you afford a budget-friendly brand new car or would it be more cost efficient to buy used? Remember that with a new car, your car insurance payment may rise. Usually it would be around 5% to 8% or the car’s price, but it could be as high as 12%. Also, factor in state registration and fees. Ideally, you should plan to spend around 10% to 15% of your income on a car and all of the included expenses.
When you’re considering making a new car purchase, whether you’re thinking of a new car or a used car, it’s imperative that you do your research on sites such as Motoring.com.au. The two main steps of car buying research are learning about the car makes and models and becoming aware of current prices. Even if you have your heart set on a certain car, don’t skip the research. You may find that a different model has the same desirable features, but a better price or a higher safety rating. Always check multiple credible sources and gather as much information as possible.
Not all cars are created equal so it’s good to go to review sites to see what people are saying in terms of reliability, fuel economy, resale value, etc.
New or used?
With a new car, you have the benefit of knowing that all the parts are new and in top notch condition. Usually, a new car will come with a multi-year warranty that covers all the parts if they need to be repaired. It has that new car smell, it’s clean, it has no miles and it’s never been in an accident. But a new car can come with a hefty price tag. Fortunately, you can finance new cars and aim for an affordable monthly payment or leasing option. There is also the biggie, the value of the car will drop significantly once you drive it off the lot, as it is now considered second hand.
With a used car, you can find a car with a few more miles, but a great price. Nowadays, used cars are higher quality than they used to be. If you choose a car that’s even just 3 years old, the price will usually be as much as 30% to 40% lower. Many car dealerships even offer some form of used car certification for used cars up to 5 years old. These certified used cars will have to pass an inspection and there is helpful advice online about purchasing such cars at Consumer Affairs.
Negotiating the asking price is part of the turf when you’re buying a car. Make sure you go into the negotiation with facts. Be sure of what the car’s value is. Be aware of competitive pricing. If it’s a used car, take it on a test drive and make sure it runs properly and it’s highly recommended to have a mechanic look it over. At the end of the day, if you have done your research and know your budget, negotiating should be easy and you should land yourself a vehicle that works for your budget.