A car and home are usually the two biggest investments that most people will ever make. So before you make an investment in either of the two, you need to know exactly what you are getting into.
Based on your earnings, you need a plan that can assist you with paying these bills without unnecessary financial struggles. That being said, if you are thinking about buying your next vehicle, you need to know how to create an automotive budget that works for you.
So, let’s get started by outlining each expense that should be included in your automotive budget.
1. The price of the new or used vehicle
When you buy a vehicle, one of the first things that you will need to consider is the type of vehicle that you will be buying. For instance, you may be interested in buying a used vehicle instead of a new vehicle to reduce the total amount of the vehicle.
On the flipside, if you are looking for your dream car, you may be expecting to pay more for a new vehicle. Whatever the case or situation, you need to know exact amounts to create a budget that works for you.
2. Car loan
If you cannot afford to pay for the total cost of the vehicle at the dealership, you will most likely agree to pay a specific monthly amount for the duration of the loan. You will be charged interest and other associated fees each month to pay the full loan amount off, and you will need to add the total amount of the car loan to the budget that you are creating.
3. Registration Fees and Tags
Some costs are recurring costs that you pay each month. Other costs are considered to be 1 time payment fees that you will pay at the dealership before taking possession. Therefore, the budget that you make will not reflect the registration fees and tags as a recurring monthly cost. So these cost will be eliminated for your monthly budget.
4. Cost of Auto insurance
In most states, buying auto insurance is not an option, it is the law. Therefore, it is very important that vehicle owners know exactly what the laws are in their state. Because these laws usually vary, you may be required to purchase liability insurance, collision insurance, or full coverage. In either situation, you need to be prepared to add auto insurance to your budget, too.
5. Cost of Auto Maintenance
When you create your budget, some of the expenses may be the same every month and others may vary from one month to the next. For instance, your monthly car note is usually the same amount each month. On the other hand, the auto maintenance can be vastly difference based on the following:
- No maintenance required – total amount will equal 0
- Oil Change – every 3 months or per specific mileage
- Break repair job – as needed – cost varies
- Engine Repair Trouble – one time cost
As you see, the cost of auto maintenance can easily vary from one month to the next. Therefore, you will need to estimate the maintenance cost for each. This estimation should also be added to the budget. However, it is also important to note that the variances in auto maintenance may leave you in a position to go over budget allocation.
To prevent going over the budgeted amount, there are a few things that you can do. According to debtconsolidation.com, one of the most reliable and common is to overestimate the cost of auto maintenance.
6. Parking Expenses and Highway Tolls
All related expenses should be added to the budget that you create. In fact, if you want an accurate financial picture of what you are paying for ownership, you need to make sure that your budget is comprehensive. Therefore, if you live in a city that requires you to pay highway tolls, you need to add an additional category for these expenses.
Also, if you are required to pay for parking at your job, you may want to add a monthly amount for parking on your budget, too. One of the primary goals and objectives is to add up all cost before making an investment in any vehicle.