Setting your budget: What car can you afford?

Savings and loans can get you the car you want. But can you really afford it?

Set your budget

Before you even get down to short listing and eventually deciding what car you want to buy, it is very important to get a clear understanding of how much money you want to put behind it. We might all want to drive a big and fancy car but not everyone can afford it. Setting your budget is mainly two-fold – first you have to figure out whether you want to go ahead and buy a car outright or whether you want to go in for a finance option. These days, getting car loans is very easy and most people opt for that route even if they have enough money in the bank to just go ahead and buy a car straight out the showroom. But that would mean exhausting up a huge chunk of your savings in a split second and that isn’t really a favourable option unless you have lots more lying around in your kitty. The advantages of opting for a loan are many-fold – it helps you spread the expense over a longer period and thanks to that you could even go ahead and actually stretch your budget more than you would be able to afford with just hard cash.

Making up your mind as far as your budget is concerned can be quite a daunting task. It’s always better to not think about what car you’d like to buy when you’re calculating your budget just so that the reality of your bank balance doesn’t get muddled up with the desires of your cars. It’s always best to consult a financial adviser in these matters simply because they will have no emotional connect with your buying decision and will be able to break down your finances in black and white, telling you exactly how much you can afford and how much of a stretch if at all, it will be. After all, you wouldn’t want to end up in a situation where you’ve bought your car and don’t have enough money to pay the EMIs. Also, when you’re calculating all your expenses, keep in mind that the task isn’t over once you’ve bought your car – you also have to pay for maintenance and fuel. Factor all these things in and you’ll be able to comfortably arrive at a budget that suits your pocket. In some cases it may not be enough to buy yourself your dream car, but at least you’ll be able to enjoy your new vehicle in peace! Once you’ve sorted the budget out, it’s now time to take a look at what kind of car you really need.


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