Many people buy a car before they have their finances in order. This can lead to all sorts of problems down the road, from being unable to keep up with payments to ending up upside down on your loan. Before you buy a car, it’s important to get your finances in order. This means taking a close look at your income and expenses, setting a budget for your money, and setting up a savings account. Below are some of the many reasons to have savings and have your finances in order before buying your car.
Save For Wear and Tear
Did you know that some racing cars or roadsters can weigh up to 3,400 pounds? Cobras weigh less, but either way, that’s a lot of metal to move around. As you can imagine, all that weight takes a toll on the car’s parts. Even if you don’t do any off-roading or take your car to the track every weekend, regular wear and tear will cause parts to break down and need replacing. Saving money for these repairs will help you keep your car in good shape and prevent you from going into debt.
Set a Budget for Gasoline
The price of gasoline is always changing, making it hard to predict how much you’ll need to budget for gas each month. However, by knowing how much your car typically uses per gallon and using a gas price estimator, you can get a good idea of how much money you’ll need to budget. You may even want to set up a separate savings account for gasoline so you’re never caught off guard by a sudden increase in prices.
Build an Emergency Fund
No one likes to think about emergencies, but they happen. According to statistics from the U.S. Department of Transportation, car crashes in New York cost an estimated $15.246 billion. That’s a lot of money! If you don’t have an emergency fund, you could find yourself in debt if you’re ever in an accident. By saving up now, you can rest assured knowing that you have the money to cover any unexpected costs.
Pay Down Debt
If you have any debt, it’s important to pay it down before buying your car. Putting down a bigger down payment or getting a shorter loan term will help you save money on interest and could even lower your monthly payments. You’ll also want to make sure you have a good credit score so you can qualify for the best financing terms possible. In addition, you could pay for your car in cash, eliminating the need for a loan altogether.
Buy Within Your Means
One of the biggest mistakes people make when buying a car is spending more than they can afford. Just because you’re approved for a certain loan doesn’t mean you have to spend it all. It’s important to only buy a car that you can comfortably afford so you don’t have to worry about making payments that you can’t afford later on.
Save For Legal Fees
Unfortunately, you might face legal trouble when driving, especially if you’re unaware of the DWI laws. In most cases, upon being charged with a DWI, your license will be immediately suspended for at least 30 days in states like North Carolina. After that, you might need to go to court and pay legal fees, which can add up quickly. If you have a savings account for these fees, you won’t have to worry about going into debt or not being able to afford the costs. In addition, your money can go toward getting your life back and getting your license reinstated.
There are many reasons to have savings and have your finances in order before buying your car. By doing so, you can avoid going into debt, save for repairs and gas, build an emergency fund, and pay down debt.