How to Plan a Budget for a New Car

When it comes to the purchase of a ‘new’ car, for many of us this is the second largest purchase we are likely to ever make and this is exactly why such a purchase should be properly thought through and planned. The purchase of a car is not only fundamental to our ability to travel on a daily basis but also for many of us is an opportunity to treat or reward ourselves. This is why there are so many different types of cars and car brands which now exist; allowing consumers the ability to make a purchase which is truly personal to them and their requirements. As a result of the vast choice available purchasing a new car does not always mean the vehicle itself is actually new and instead could mean buying a car which is considered used; meaning there has been one or a number of owners before you. When a car is used it does not mean the quality will automatically be poor or of considerably less value compared to a brand new version of the same model. With all of this in mind the main point here is that the purchase of any car; new or old, is not a decision which should be made without thought for the financial cost involved. Today we will be looking at how to plan in a manner which is affordable and realistic when deciding to purchase a new car.

Aside from the obvious need to ensure the car selected is fit for purpose, which quite frankly, is often entirely down to personal preference! The other main consideration with any large purchase is the overall cost of the goods or service selected. In order to ensure the cost of the purchase does not exceed what is truly realistic to you as an individual it is important to make a selection in terms of costing which is in line with your existing expenditure. To achieve this effectively and with little effort a tool known as a monthly budget plan could be considered. The concept of a budget has been used for many years by companies and consumers alike to understand where money is being attributed to within a given period of time. This is why even on a small scale a budget can play an invaluable part in the decision process for you and I when purchasing a new car.

To successfully complete a budget all monthly incomings must be listed along with all monthly outgoings. This means being honest and as accurate as possible regarding the consistent costs you face every month as an individual. In simple terms a budget must include any costs linked to your household, your travel expenses, food and any existing financial commitments. Once these costs are totalled they must be deducted from your regular and stable monthly income. The amount which is then remaining is known as your spare or ‘disposable’ income. When looking to purchase a new car, any new monthly financial commitment must fit comfortably within this spare amount. This will dictate how much money you can borrow from a direct lender.