Buying a car is a really exciting thing, especially if it is your first one. It gives you freedom of movement and independence like you never realized existed. It also creates job opportunities and better angles for date nights. In short, owning a car can completely change your life. But unless you are very rich, very lucky or very financially savvy, when it comes to buying that first car you are probably going to be opening yourself up to a whole new world of expenses and debt. Because as much as buying a car is freedom and opportunity, it is also responsibility and obligations. So you need to be smart when making that purchase to ensure that the cost of freedom is not too high. Here are some tips.
Unless you have just come into some inheritance or a lottery win, buying your first car will almost certainly require financing. Be smart when seeking out a solution and don’t necessarily go for the maximum amount available to you. You can find the best car loans Australia has available by searching online, but the key is as much the interest rate that they offer as it is the decisions that you make with regard to what you commit to. Remember that a car is freedom and opportunity. If your monthly repayments are so high that you cannot afford to put petrol into the car, then there really is no point in making the purchase in the first place.
Think of all the costs
Buying a car is not just about the initial purchase. Obviously that is a very important part of the process, but so too is keeping it running and legal and on the road. Buying car is not just committing to the monthly loan repayments, it is also committing to things like petrol bills and licensing costs and insurance. And of course you are going to want to spend additionally on the car as well to ‘pimp your ride’ a bit and make it something that is truly yours.
As soon as you own a car you should start a contingency fund into which you transfer money on a monthly basis. It doesn’t need to be a huge amount but you must build up a kitty that you can dip into when the inevitable big expenses come your way. These expenses could be a new set of tyres, or a major service or speeding fines. It might be excess payments on your insurance. Whatever the costs may be, when they do come they tend to be more than you can afford to pay from your monthly budget, so it’s much better to have a plan in place to cover the costs than have to dip into your credit cards.
Get full value
Once you have an asset you need to make sure that you extract the maximum value possible from it. That means you should use it as wisely as possible to generate as much extra income from it. This could mean loaning it out as an Uber in the evenings or during the day (whenever you are not using it). It could mean charging people to share rides with you. Whatever you chose to do with it, be aware that you are paying to run the car and that friends and hangers-on without wheels will immediately start seeking to take advantage of you and the fact that you can get them places for free.