How To Budget For A New Car In Waterloo

How To Budget For A New Car In Waterloo

Posted on February 22, 2021

Creating a budget for a new car sounds serious but it really doesn’t have to be. It can be as simple as balancing the books and putting everything left over into a car fund. It can also be much more in depth. We prefer doing things the easy way as it’s much easier to stick to the plan.

If you’re planning a new car purchase at some point, budgeting is going to come in useful. That’s especially true if you’re going to be using a Waterloo car loan as part of the purchase.

So, let’s cover a quick budget aimed at making that car loan affordable and ensuring you can manage the payments comfortably.

Create a budget for a new car

You can create a household budget or an individual one, whatever works best. List all your income in one column of a spreadsheet and all your outgoings in the other.

Add them up so you know whether you’re running a credit or deficit. Add another column outlining all your current debts so you’re fully in the picture.

Allocating salary for the Waterloo car loan

You can spend whatever you’re comfortable with on your car payments but we recommend the 20/4/10 rule. It’s commonly used in car finance as it’s a sensible ratio.

That means put 20% as a down payment over 4 years and the monthly payments should not exceed 10% of your income.

The idea is to keep things comfortable without making you wait forever while you save the down payment. It also means a sensible loan term where you can see the end and not spend everything you have on your car.

Budgeting for the car

Don’t forget there is more to owning a car than just making your car payments. You also have to factor in:

Gas – The amount you spend on gas each week or month can also have an impact on affordability. If you drive a lot, shopping for a frugal car could make things much more affordable.

Insurance – Nobody can escape it and it can work out expensive for some. Factor in monthly or annual car insurance payments into the running cost of the car.

Servicing and maintenance – Not so much of an issue for new cars, for the first three years at least. However, that final year if your car has a 3 year warranty may involve servicing and maintenance costs.

Tires – The cost of tires depends on how and how far you drive. A set of tires may last you the whole 4 years of the loan. They may not. You may also want a set of winter tires and if the wheels are a different size than your current set, you may need to buy some.

You will likely already know a lot of the expenses already from current experience. While it seems a lot to work out, you will likely already know how much you pay in gas, in insurance, how many sets of tires you go through and how long it takes.

All you need to do is factor it into affordability and make sure that even with Waterloo car loan payments, you’ll still end each month in credit.

Contact Unique Chrysler for help, advice and competitive car finance.

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