How to budget for a car
1. Write up a budget
The very first step in budgeting for a new car, is budgeting for yourself. Spend some time writing up a budget that covers:- your income,
- regular bills such as rent/mortgage, utilities, internet and phone,
- memberships,
- groceries,
- fuel,
- insurances,
- existing personal loan or credit card repayments,
- car registration,
- personal expenditure such as subscription services and entertainment.
2. Look at the full cost of the car before taking out car finance
The most sensible car owners do their research before they decide on which new vehicle will be theirs. The purchase price of your car is not where the spending stops. RACV estimates that the average cost of running a light car is around $770 per month (averaged over five years), with bigger four-wheel drives costing over $1,800 a month!
Petrol prices are seemingly only going upwards. A larger engine typically means more fuel. Of course, it pays to check whether you’re looking at a petrol or diesel engine. Hybrid options can be great for reducing the cost of fuel if a fully electric vehicle is out of your price range.
Stamp duty is a tax that’s levied by state governments and is required to be paid when purchasing a motor vehicle. Stamp duty even applies when you’re transferring ownership of a car, such as when you buy one second-hand. Different rates of stamp duty apply depending on which state or territory you live in.
Loan repayments and insurance
Financing your dream car with a Finance One vehicle loan may be a way to afford your vehicle if you don’t have enough money in your savings account.
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Check how much your repayments might be if you were to be approved for a loan with Finance One, using our car loan repayment calculator.
Apply Online Now3. Start saving!
Using a personal budget and factoring in the car’s running costs should give you a pretty good idea of what you can afford and what models are realistic . Saving enough money for your dream car can be made easier by putting money from each pay into a separate account. Having a savings account purely for car savings can keep you motivated and on track.4 . Consider if a Vehicle Loan is the right option for you
There’s a lot to think about when tossing up whether to buy a car outright or through finance.Finance One Vehicle Loans
If you’re on a low income and think you can’t sufficiently save enough to buy a vehicle outright, Finance One helps everyday Australians access affordable loans, who would otherwise struggle to get their loan application approved with mainstream lenders.
Apply Online NowFrequently asked questions about saving for a vehicle
Should I buy a new or used car?
You should weigh up the pros and cons as to whether a new or used car is best for you. New cars generally come with factory warranties and often have fixed priced servicing, however, can drop in value by as much as 30% after just a couple of years of owning them. This is called depreciation and is worth considering if you ever want to sell.Is getting a secured loan for a vehicle a bad idea?
There can be many benefits to financing a car, such as better cash flow, taking delivery sooner rather than saving, being able to enjoy a better lifestyle or making transportation safer for you and your family, as well as having the opportunity to promote a healthy credit file and boost your credit score. We can work with you to assess your full credit profile and your ability to meet repayments if you were to be approved for a loan.Good to know: At Finance One, we don’t penalise people who choose to repay their loan sooner. With no early repayment fees, you’re free to make additional repayments or repay your loan at any point during the loan term.
Apply Online NowIs comprehensive insurance worth it?
One of the ongoing costs of vehicle ownership is your insurance cost. Comprehensive insurance provides you with much better cover than other automobile insurances and can be one of the only ways to replace your vehicle if you have an accident.Good to know: If you access a secured car loan, many lenders will require comprehensive insurance as a condition to lending you money.
Car loan FAQs
What is a comparison rate?
A comparison rate is a representation of the true cost of a loan. It considers the interest rate as well as additional fees and charges. It can be tricky to compare different loans based on the comparison rate because comparison rates are determined using a hypothetical borrower with a good credit score. Someone with a poor credit score may struggle to get approval for an interest rate close to the comparison rate.
At Finance One, we use a personalised rate based on your financial situation and individual circumstances.
What is a fixed-rate loan?
We could help you...
Finding your dream car on a budget can be easy with a Finance One Loan. Contact us today to find out how we may be able to help!
Apply Online NowDisclaimer: The information above is of a general nature only and does not consider your personal objectives, financial situation or particular needs. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your particular circumstances. We do not accept responsibility for any loss arising from the use of, or reliance on, the information.
Normal lending criteria apply. Fees and charges are payable. Terms and conditions apply.
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