Four Fantastic Budgeting Tips for Your Vehicle

Owning a vehicle is one of the biggest expenses that the average person has. In addition to the cost of the car, you’ll have to consider maintenance, depreciation, gas, insurance, and warranties. According to a study from AAA, the average annual cost of owning a car reached a record high of $9,282. However, although there are several variables when it comes to vehicle ownership finances, there are ways that you can curtail your costs.

Here’s what you need to know: 

Consider All Costs 

One of the most important steps you should take when purchasing a vehicle or trading in a vehicle is to take a holistic look at all the costs associated with your vehicle ownership. It’s not uncommon for buyers to think only of their monthly payments, rather than the monthly bundled costs when all expenses are considered. Even if you don’t have insurance just yet, you can use online calculators to help predict certain costs. Furthermore, the general rule of thumb is that insurance costs will be between 5% to 8%. 

To help you understand how to calculate costs, start with the initial expenses you’re expected to pay. These include your down payment, state fees, taxes, dealership documentation fees, and miscellaneous dealership fees. Recurring costs to consider include monthly car payments, gas, insurance, state registration renewal, maintenance, and tax. 

A warranty will cover the cost of any major repairs that your car might need. If you purchase a newer car, chances are you’ll spend less on regular maintenance—which isn’t usually included in manufacturer warranties—however, you can expect to pay a higher premium on your insurance. An older model, on the other hand, might have a smaller warranty window, but you’ll pay less upfront and you may not be as impacted by initial depreciation costs.  

Save For Your Downpayment 

A downpayment can be a scary venture for any vehicle owner. You may be tempted to keep your downpayment as low as possible, but you should think twice before doing so. With a larger down payment, you won’t have to pay as much interest and the overall cost of your vehicle will be much less in the long run. You’ll be able to pay off the cost of your car earlier than you would have otherwise and have less total payments. 

Furthermore, with a larger down payment, you own a bigger share of the car, which will be helpful if you need to sell or refinance later down the line. Ideally, you should aim for a down payment of 20% of the car. By doing so, you may also be able to negotiate a lower price.   

Try to Avoid Luxury Brands 

If you’re concerned about cutting cost, now may not be the best time to shell out extra dollars for a dream luxury vehicle. Premium brands come with a slew of additional costs that you may not realize until you’ve already dumped several thousand into it. From higher insurance rates to specialized fuel, luxury vehicles aren’t the way to save. Repairs, premiums, and maintenance will be more expensive. Instead, focus on vehicles that you need versus vehicles that you want, and be realistic about what you can afford. You can also integrate premium add-ons, like adding window tinting for your car, adding shrink wrap, or throwing on some new rims.  

  Cut Insurance Costs 

Always shop around for the best insurance rates before you commit to a policy. Gather at least three different quotes before making a final decision. After you’ve done your due diligence, you’ll find that there are several ways you can save money. For instance, there are many insurance companies that offer a bundle deal if you purchase different types of insurance from them, like car insurance and home insurance. Similarly, you may be able to get a better deal if you have more than one vehicle insured with the same company. 

If you’re a loyal policy holder with a solid payment history and reliable credit, you can also negotiate your rate—particularly if you’re calling in at the end of your contract. Insurance companies are much more likely to work with you and your budget if you’ve maintained a clean record with them, and chances are they don’t want you switching over to another company. 

Lastly, there are some companies that can offer mileage discounts to drivers that don’t often ride their vehicles. If you use your vehicle sparingly, you’re a low risk driver and can use your mileage to leverage a better deal. 

 

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