The golden rule is, "If you can't afford it, don't!" but a lot of people make the mistake of buying a car or getting a car loan even if they know that they CANNOT afford it. In the end, either the car get's repossessed or you start skipping meals just to get by. That is the worst situation to be in.
Many fall into this trap, well, not really a trap but kinda, when the good looking new models, with the most up-to-date technology, come out. And that happens year after year and, every so often, a new sleek body is introduced so who wouldn't want those, right? If you can afford it, hell yeah!
So how the heck do you budget for a car purchase? Consider the following so you get a ball part figure of how much you're gonna spend. You may also check out ASIC's MoneySmart Cars App. It's a cool tool that let's you calculate the real costs of car ownership.
Cost of the vehicle and monthly repayments - This in itself needs a lot of thinking through. We all love that new BMW that came out and that Ford Ranger Wildtrak but, ask yourself, what vehicle do I really need? What will I use it for? A Wildtrak may not be the best for everyday city driving.
Maintenance costs - Maintenance is a regular expense that you can't and should not delay because you could end up spending more money in repairs. Passenger cars are the least expensive vehicles to maintain depending on the brand of course but what I mean is, cars are more affordable to maintain than UTEs.
Gas prices - Estimate how much you'll spend for gas every month by knowing the car's fuel efficiency and your travel distance. You can't really know for sure because your usage will vary but at least you'll have an idea and you can set a budget for it.
Registration cost and other fees - This varies from state to state so I suggest you check with you local Department of Transportation.
When you arrive at a rough figure of how much you will spend upfront and on a monthly basis, you'll be in a better position to decide whether buying a car is a good decision or not.
Alternatively, you may also speak with a finance broker for help in both assessing your financial readiness and car loan application.
