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Budgeting for your car payments

 


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For some, having a car is a matter of convenience, a way to get from point A to B or move people and things around. For others owning and operating a vehicle is an essential part of their daily lives. Without a car, many of us simply couldn’t do our jobs and make a living. For example, if you’re a service provider you’ll need your car to get around and visit clients. If you live in a more remote location, you’ll need a car to access your place of employment.

Of course, you’ll want to find a reliable vehicle that meets your needs. Acquiring even a used car can be a hefty financial investment and there are the ongoing costs of maintenance to consider as well.

Car financing gives us the option to get the car we need in a budget friendly way. However, careful planning is required to ensure that you don’t fall behind on your car payments and risk damaging your credit or having your car repossessed. Here are some tips to keep in mind:

- Set a monthly budget – even before you start to research car finance options, set a monthly budget for yourself so you know how much you can afford when it comes to repayments. Once you settle on the final terms of your loan, revisit your budget to ensure you know when and how you’ll be making your payments.
- Remember to budget for other expenses – keep in mind that it’s not just the repayments you have to account for, but all of the additional expenses that come with owning a car. That includes registration, petrol, insurance and ongoing maintenance
- Know the terms – no two car loans are the same and you should understand exactly what the terms and conditions of your arrangement are so you’re not caught off guard. How long will I be making repayments for? Is there a balloon payment or residual to be paid off at the end?

Owning a car offers greater freedom and mobility but can incur a substantial financial burden if not properly accounted for. Budgeting requires responsible planning and ongoing fiscal responsibility. Missing payments could negatively impact you for the long term. It’s hard to overcome bad credit; car finance and other loans will become that much harder to secure in the future.

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