If you are in debt but in need of a vehicle, it can be hard to know how much is truly affordable. Let’s look at some things to consider for the frugal lifestyle when searching for a car.
When you are trying to manage your debt and meet your budget goals, transportation becomes a crucial factor. If you can’t get to and from work, you can’t earn the money you need to survive. Some people are lucky enough to work remotely, but even they have to get to the store, the bank, and everywhere else.
Not all places have reliable public transportation, and you might find yourself needing to buy a car in spite of your current financial situation. In this case it’s more important than ever that you buy a car that will fit neatly into your budget. This includes the purchase price, as well as the cost of operation.
First Things First: Consider a Used Car
Forget about buying a brand-new car. Even if you have the income to support such an extravagance, new cars are one of the least wise investments you can make. In addition to being overpriced and expensive to maintain, a new car is a depreciating asset. As soon as you drive it off the lot, the value will go down. It will continue to go down with every passing day and every mile you put on the vehicle. Let someone else pay the instant depreciation. Plus, the insurance will be lower on a used car!
Learn more about the differences between buying a new and used car by reading our in-depth article on the topic.
Calculate the Future Cost
The cost of keeping a vehicle in good running order is not always something you think about when deciding what to purchase. But without considering these costs, you may exceed your monthly budget. You will want to get the vehicle serviced on time, of course, but what about the cost of gas? If you drive a large truck with an oversized engine, you are going to be spending twice as much or more on gas as you would in a small car. The vehicle should fit your needs, and unless you plan to use it for work, you should get something that is cheap to maintain and to operate. The type of vehicle will also affect the monthly cost of insurance, so be sure to shop around.
Down Payment, Trade-In, or Both
In the best-case scenario, you are able to pay cash for your car and avoid the monthly payments. But since this isn’t always the case, you will still need some funds up front for a down payment. This will reduce your overall cost and monthly payment. If you already have a vehicle, you should discuss trading it in to offset some of the purchase price. Even if it’s not in good shape, most dealers will make you an offer. If you are able to make a down payment and also trade in a vehicle, this can substantially lower the cost and help you stay within your budget.
Knowing how much car you can afford before you begin your search will go a long way in helping you make good financial decisions. And if you are in need of credit counseling or debt management services, CreditGUARD is here for you with certified credit counselors, ready to get your budget where it needs to be. Call 800-500-6489 today and see how we can help you move toward financial freedom!