How Much Should I Spend On A Car?

*This is a collaborative post on how much you should spend on a car

Buying a car is the first big purchase many people will make in their life. Owning a vehicle offers a number of benefits such as independence, freedom, and convenience. However, when reaching this milestone, it can be easy to get over-excited and make impulsive decisions without taking several key factors into account. For instance, how much am I realistically going to drive and how much can I afford without breaking the bank?

When it comes to buying a car for the first time, or even if you’ve bought cars before, it can be difficult to determine how much you should spend on your purchase. Furthermore, it can be even more difficult to choose between makes and models. However, there are a number of factors that you should consider before making the decision – read on to find out more.

Look at Your budget when thinking ‘How Much Should I Spend on a Car?’

First and foremost, you should be guided by your budget. If you are buying a car outright with savings or similar, this will give you a clear idea of how much you can spend. If you are looking to buy using credit – either with a loan or on finance – you need to work out how much you can comfortably afford in terms of repayments per month. This should be in proportion with your monthly income, leaving you with plenty of money for other bills and living expenses. 

It is important to remember that you will have other bills to pay for your car, such as road tax, fuel, and insurance, which will add up every month.

How much you will drive

Having a nice car is all well and good, but if you aren’t going to make use of it – why spend more than you need to? For example, if you’re going to continue working from home like many moving forward, expensive monthly car payments and petrol costs may not be worth it for the odd trip to see family or doing the weekly shop. Consider how much you are likely to drive and use this to determine the price range you should be going for.

Of course, if you drive regularly and long distances you will want a fuel-efficient and reliable vehicle. Spending more money here can be justified because the car should hopefully prove its worth in the long run.

How important is a car to you

If a car is simply to get you from A to B, then buying a brand-new model is probably not the way to go. On the other hand, if you love driving and are passionate about motoring, then this should ultimately impact how much you are willing to spend. Furthermore, if you need a car for a specific purpose or with specific features then this should influence your price range too. For example, if you need a car to complete the school run then you will certainly a vehicle with adequate space.

Buying a car is a very personal venture and each decision should be made with your specific circumstance in mind. How much you could or should spend will be determined by a few factors as outlined above. How much will you spend on your next car?