Thursday, 21 July 2016

How to Afford Your Dream Car On a Budget

Mini Cooper S

There are often moments when many of us yearn for our dream car. Maybe it’s when our old banger refuses to budge from the drive in the morning, or when you pull up in the car park next to the boss’ shiny new motor. Whatever we own, the likelihood is that our car is something that we’d love to upgrade. It’s why 3,000 National Lottery-winning millionaires have splashed a collective £460 million on cars.

But you don’t have to win the lottery to afford your dream car. Here are some tips to help you achieve your dream on a budget…

Budget properly
There are two important elements to affording your dream car on a budget: your dream and your budget. Your dream is an emotional decision based on the car that you’d love to be able to drive.

The budget, however, is something that you can work out and improve. Go through your finances with a fine tooth comb. Weed out any unnecessary expenses, trim any bills that you can and make sure you’re fully aware of the disposable income and savings that you have to play with. By making some cuts here you may well free up vital funds that can go towards your ideal motor.

Then you need to work out the cost of your dream – not forgetting the £3,500-a-year running costs this entails – and come to a proper, thorough conclusion about the gap, if any, between your budget and the cost of your dream.

Search for a bargain
Patience and persistence should be your watchwords. Be prepared to wait until the right car comes along with the right deal for your budget. That might take many months, but it’ll be worth the wait.

Also, search as far and wide as you can. Look at dealerships and private sellers and be prepared to travel. What’s 50 or 60 miles if it means landing on your dream vehicle?

Consider all financial options
Weighing up all of your options refers to finance as well as places to buy your dream car. Don’t think that you have to take up the finance packages offered by dealers. A personal loan might offer you a lower rate and be a better option for your circumstances. Borrowing at an interest rate that is two or three per cent lower could save you a lot over the course of your agreement.

Lease don’t buy

The type of seller and finance package are important, as is the form your ownership of the vehicle takes. Leasing a car can be a great way to get access to your dream car, without the need for a big up front cost. It’s also great if you know you’re the type of person who is likely to want a very different dream car in just two or three years as technology and tastes change. Lease Car illustrates this with the example of an £18,000 car. It shows how buying this requires you to find that £18,000 upfront (or more over the course of the loan). In three years this car might well be worth about half of its original price. By leasing for £250 a month you’d spend just half of the price of the vehicle in three years, with maintenance and MOT costs covered and no need to keep a depreciated asset.

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