Whether it’s your first car or your fifth, the first step in buying a car is figuring out your budget. No matter how tempting, the last thing you want is a car that you can’t afford to pay off. Also, remember to leave money aside to pay for the day-to-day running costs of your car.
Running costs will vary depending on how what kind of car you have and how often you use it, but you’ll need to pay for more than petrol. Basic yearly costs are: car insurance, warrant of fitness (WOF), vehicle licensing, any memberships such as AA, a yearly service, and any maintenance required, e.g. new tires.
The AA have a helpful guide to running costs here.
Work out your budget overall. Make a list of your current monthly expenses such as housing, utilities, childcare, groceries, etc. Next, see what you have left to spend on a car. You don’t want to be strapped for cash after a loan payment.
If you’re looking for a printable template to help with budget planning, take a look at this.
Figure our your payments with our car loan calculator
Our car loan finance calculator will do all the hard work for you. Just enter your details and figure out a payment amount that’s right for you. You can also include any insurance or warranty benefits in your calculations.
Do you money for a deposit? The more you can put down on a vehicle the better – so see if you can save anything up before you buy. If you are selling a previous vehicle then enter this amount into the calculator to see how low you can go with your payments.
Figure out how much your old vehicle traded in might be worth using sites like Edmunds true pricing.
What’s the quickest you can afford to pay off the loan?
Our loan terms are between 6 and 60 months. The key thing to remember is that the longer the term of the loan, generally the more interest you will pay. Some lenders allow you to increase your payments or pay lump sums both of which will reduce your interest.