Owning a car can be transformative for young people who want to be more independent, but that freedom comes at a significant financial cost. Not only are cars expensive, but they come with a lot of hidden costs that can be highly unpredictable. Before you head to the dealership, then, you need to create a comprehensive budget. So where should you start?
Look beyond the sticker price and consider these 3 categories before you sign off on your first vehicle. From insurance payments to repairs, cars cost more than first meets the eye.
You can’t put a car on the road unless it’s registered and insured, so whatever your car costs, you need to add these expenses on immediately. Contact your local DMV to find out how much registration and vehicle tags cost. You’ll need to present proof of insurance in order to complete the registration. Price different insurance options and choose a plan that meets your needs. You’ll want to have enough financial support if you get into an accident with your new car.
Pay At The Pump
How much you spend on gas depends entirely on your car’s fuel efficiency, and as gas prices rise, your fuel budget should be a major concern. One way to skirt this increasing cost, though, is by purchasing a hybrid car rather than a conventional vehicle. Small cars also typically have better fuel economy than their larger brethren.
There are plenty of affordable options in the hybrid car category, including the Prius Two, the Lexus CT 200H, and the Hyundai Sonata Hybrid Limited. All of these have been on the market for a few years, so you have the added financial advantage of buying a gently used vehicle rather than a new one.
Prepare For Maintenance
When setting up an overall budget, financial experts typically recommend saving six months worth of income, but when you own a car, you might want to tack on a little extra. Why? One key reason is that, when trouble strikes, most of us become more dependent on our cars, not less. You’ll want to be able to afford regular maintenance as well as get your car repaired if something out of the ordinary happens – if the exhaust system breaks down, for example, or the windshield breaks.
How much should you add to your budget? According to AAA, you need to set aside about $99 a month for new car maintenance, but it depends how much you’re driving. If you’re staying in the neighborhood, you’ll likely need fewer oil changes than your highway driving neighbor, but you aren’t immune to potholes and flat tires just because you’re driving the local roads.
Of course, you can minimize the odds of paying these added costs by investing a car with low maintenance needs. The Toyota Venza is considered one of the most affordable mid-size SUVs in terms of insurance and maintenance costs, for example, while both the Honda Fit and Accord offer great fuel economy for a less expensive ride.
Owning a car can be beneficial in many ways, but it won’t come without costs of its own, so be sure to bolster your savings before you make this big purchase. After all, the worst thing you can do is to buy a car you can’t pay for. Make every dollar worth it.
Author: Oliver Curtis
Hi there. I’m Oliver. I’m just a young boy from the outskirts of… Okay, that’s a lie, I’m not a young boy anymore, although I certainly feel that way at heart.