Are you thinking of purchasing a new vehicle? Before making a purchase, you should consider the associated costs of owning a car to make sure it is within your budget.
Often we tend to forget the costs that we have to pay following the initial purchase, i.e. car maintenance, gas, and auto insurance to name a few. Your monthly cost should be within 10% of your monthly income.
Purchasing and maintaining your vehicle
A new vehicle will cost you more money up front, but the new vehicle warranty you receive will lower maintenance costs for the first few years. Oil changes are usually not covered and should be factored in when budgeting. A used car might cost less, but it is likely that maintenance costs and auto insurance premiums will be higher. For a used vehicle, budget at least $100 per month for maintenance and unexpected servicing costs.
Your vehicle insurance
When you are looking to buy a car, auto Insurance costs should be considered. Prior to buying a car, talk to your broker about a preferred vehicle to make sure you are comfortable with the cost of insuring it. Your insurance company can let you know about variables that might affect your premium, such as age, driving record, and years licensed. The type of vehicle you purchase can also affect your premium. After you provide your broker with a copy of the purchase, you will receive a confirmation of the premium. If you obtained a car loan, the bank will request this confirmation of insurance.
Additional vehicle costs
Gas prices fluctuate, so it is hard to predict monthly gas costs. The cost will also depend on the type of vehicle you buy and how often you drive it. You can check the gas mileage rating when picking a vehicle. You will also have to pay an annual fee for your driver’s license and your plate sticker.
Remember, before you purchase a car that you have calculated all the costs associated and that it fits into your budget.
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