How to buy a car on a budgetSep 12, 2021
Do you find the task of looking for a decent car for minimal cash that isn’t going to break down the moment you drive it down the street daunting?
We once had a beautiful car on finance but due to too many expenses taking control of our lives we had to cut back and one of the first things to go was our car which saved us a whopping $150pw plus what we spent on insurance, services and rego.
We managed to get by with one car and could borrow my parent's car every now and again - since I had gone back to full-time work this made it a bit easier to manage.
8 months went past and this allowed us to really make a kick start on our debts and get things manageable.
The time then came that we needed a second car. We had saved up $3500 for it. So where to start?
We needed to find the sweet spot with age, mileage, condition, and price. Which when your on a budget feels extremely difficult BUT its possible.
My biggest thing was not to panic shop and buy the first car that looked ok, I saw some terrible cars and wanted to cry every time we drove away, was I ever going to find a car that looked decent on the inside and outside and drove well.
I almost bought one that looked nice on the outside but inside had chunks missing and there was an oil leak on its latest service. They wanted $3000 for it I almost did it but something didn’t feel right.
Hands up who would love a brand new car? I am not going to lie I would. But it is not practical.
First, we don’t have $25,000 to pay for one outright, the interest you pay over 5 years is crazy (sends me into sweats just thinking about it now.) A car is a car, it doesn’t matter what it looks like as long as it does it’s purpose and not cost you more than it should (this is something I have learned on our budgeting journey) and remember to drops in value as soon as you drive it off the car lot.
We sold our car in April to get a car that we could use as my husband's work car and our weekend adventures with me returning to work my car was sitting in the garage costing us money. Insurance, Registration, Servicing, maintenance and petrol for two cars was getting way too hard on our budget we would rather put that extra money to get rid of our debts.
You can beat the depreciation and buy second-hand. This does involve a lot of research and don't buy the first car you see (if you do like it goes see others so you can compare) here is a couple of tips I have gained over the years.
- Decide on your budget and stick to it (it is easy to go "oh if we add an extra $500 we can get this" "or if we add $1000 we can get that" before you know it you will be $3000 over your original budget price)
- Exit Strategy choose a vehicle that will hold value, popular models that will be easy to resell
- Choose a car that is going to be easy to get parts, maintenance is an expense that can add up over time and the older the car gets the more likely it will often need fixing
- Measuring a car's KMs: Rule of thumb the average car will rack up 14km per year, yes buying a car with more mileage would be cheaper but the maintenance costs will be dearer as with the more mileage on the clock the more wear and tear it has. Also, think of resale if you buy a car that already has 170,000kms you have it for the next 3 years that clicks it over the 200,000 mark and selling a car with over 200,000kms is a lot harder.
- Do you purchase from a Car dealer or Private? Buying a car from a dealer does take a lot of pressure off you as they handle all the paperwork buying private means you have to do it all yourself. It depends on you and how you feel about each situation. If you choose Dealer do your research on the Dealer.
- If you are really keen on the car do a REVS check. A good example is a previous colleague of mine who bought a new car he was tossing up between two he did a REVs Check on the one he really liked but the seller wouldn't tell him who owned the car last. The REVs check came up that it had been written off not once but twice in 2017!!!!! This could hinder insurance so please make sure you get it checked. The other Dealer paid for the REVs check for him and it came up clean (why it is important to buy from the right dealer)
-If you can get a mechanic to check over the car for you, many years ago we were going to buy a ute, looked nice asked if our mechanic could look over it, they did and there was oil all through it phew so glad we got it checked that would of been $8000 down the drain.
Finally, DO NOT RUSH!!!! (we might of taken longer than normal as at the time we struggled to actually look at cars, full time work plus two kids) you don't want to be forced into buying a car as this won't allow you to do your research and you may choose a Lemon (hehe Cars 2 reference) also don't give up hope you will find the right car for you!
However if you are determined to buy a new car consider a demo car, this is the car that the dealers use for you to test drive already it has some mileage on the clock and is a brand new car sold at a cheaper price. If you buy brand new play it safe, don't be adventurous with your colour choice or add-ons think of your exit strategy what would make it easier to sell. If you were to sell it in 3 years what would its value be, and would all the finance be paid off.
Once you have bought your car (New or Used) make sure you look after it well, this will make selling it a lot easier and you will get the money you ask for it
- Make sure your car is serviced regularly and keep all the service receipts (tip when selling make it easy for the potential buyer to view them, when looking at cars they say they have the full service history but when I asked to see it they couldn't provide it to me) also tells the buyer that this car has been well looked after)
- If possible keep your car in the garage to minimise paint and interior wear due to weather conditions
- Wash and polish regularly and keep well maintained inside, Worn carpet, holes, stains and tears in the upholstery can give buyers the impression of a car that is badly maintained (yup seen so many of these wanted to cry and turn away as soon as I turned up to view a car, with kids in tow it is a mission to view cars and if there is no photos of these in the advert then it is unfair on your potential buyer)
- Consider getting small damage fixed as the potential buyer could use this negotiate the price down but only fix if it is going to be less than the potential drop in price.
I hope this has helped, possibly it could of made it worse for you as there is so much to think about but when it comes to your budget and creating a financial future it is so important to know your costs, before buying the car know how much you can afford to buy, and know how much you can put aside for running costs.
If you need help with your budget you can now get a copy of our 90 day Budget Journal - it steps you through the process to becoming Financially Fearless. Through the 12 weeks, you will get to know how much it costs to be you, what your goals truly are and keep you accountable to the actionable steps you need to take to get you there. - get your copy here
Terri Watson is a mother of 3 after experiencing her own financial rock bottom moment she is on a mission to help other families become Financially Fearless - you can join her free Facebook Community here
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