If you’re looking to buy a new car in the UK, one of the first questions you’ll need to answer is, “how much can I afford to spend?”
That’s where a car loan calculator comes in handy. With a car loan calculator, you can input your monthly budget and see how much you can afford to spend on a new car.
But how do you know how much you should be spending on a new car in the first place? Here are a few things to consider when budgeting for your new vehicle:
How to Calculate Your Car Budget
There are many factors to consider when buying a new car, and one of the most important things to consider is your monthly budget. To start, you should calculate how much money you have available for a car each month and what other expenses you may have.
With so many car options, it may be best to start with your budget and then narrow down the cars you like based on your needs and wants. If you’re planning on buying a vehicle that will see more road time as a commuter, a smaller car with good fuel efficiency is a good choice. Look at a small SUV or minivan if you’re likely to haul your family around to different events all week.
The Cost of the Car Itself
One of the most significant factors in deciding how much to spend on a new car is the cost of the vehicle itself. The average price of a new car in the UK is £27,000, but that number will vary depending on the make and model of the vehicle. Research how much you’re comfortable spending on your new car.
The Cost of Running a Car
Owning a car isn’t just about the initial purchase price; ongoing costs are also associated with running and maintaining a vehicle. Before you budget for your new car, ensure you have an estimate of these costs to factor them into your decision. Some of the ongoing expenses associated with owning a car include the following:
- Fuel costs
- Insurance premiums
- Road tax
- MOT costs
- Service and repair costs
You can reduce some of these costs to help you afford a higher car payment by shuffling around where you’re paying the most. For example, you can raise your deductible to reduce your insurance costs. You can also ensure you maintain routine service to reduce the costs of repairs and keep your car running smoothly and efficiently throughout your term of ownership.
Unfortunately, road tax and MOT costs are a standard set of fees that can not be affected by you and your upkeep of the car, but the others can help you make the most of every hard-earned penny you put into that car payment.
By considering these costs, you can get a better sense of how much you’ll need to budget for your new vehicle overall.
Buying Your Car – Dealership vs. Private Sale
There are pros and cons to buying your car from a dealership or a private seller. When deciding how much to spend on a new car, consider these factors as well:
The cost of financing the purchase
Whether you’re comfortable purchasing a used car or prefer a new one, you’ll need to consider how you plan to pay for it. This is an excellent option for your budget if you’ve got the money saved up to buy the car in cash. However, most people want or need cars that are newer and often more expensive than what a typical person is able or willing to save up in cash.
Whether you want to buy outright or take out a car loan to pay for the car, some banks will allow you to take out a loan for private purchase but may ask you to complete one or more pre-purchase tasks and questions to ask to ensure the car is worth the investment.
Whether you want to buy or lease the vehicle
Ultimately, the decision of how much to spend on a new car should be based on your personal preferences and financial situation. With a clear budget, you can shop for your perfect vehicle confidently. So what are you waiting for? Start shopping for your new car today!
The Perfect Car for the Perfect Price
There’s no one-size-fits-all answer to the question, “how much should I spend on a new car?” Ultimately, it depends on your budget and what you’re looking for in a vehicle.
However, by factoring in the cost of the car itself and the ongoing costs associated with running and maintaining a vehicle, you can get a better sense of how much you can afford to spend. And if you’re not sure where to start, try using an auto loan calculator to help budget for your new vehicle.