Dreaming of owning your first car? Buying your first car can be expensive especially for young people. Here are some tips to help you focus on exactly how much you’ll need to put you in the driving seat.
New versus second hand
If you’re buying brand new, lucky you but remember there’s always small print around the price quoted. So make sure you’re aware of what comes as standard and what you’ll need extra funds for. Those bits and pieces can add up to a considerable amount quite quickly. A new car also may mean higher insurance costs so this needs to be factored in also.
If it’s a second hand car, you might want to have a mechanic check it out before you hand over your cash just to be sure everything is ok. So that could set you back about €100 or more. Do ask friends and family for recommendations on mechanics they’ve maybe used in the past.
Your absolute must haves
Engine size, number of doors, alloy wheels, colour and finish can all inflate costs. So be confident about what you will and won’t compromise on at the outset to keep your costs realistic.
You might find that being practical rather than flashy is more affordable, particularly when it will do the same job either way … get you from A to B.
The necessary extras
Car tax and insurance are unavoidable when you have a car. An average combined cost for both could come in at around €3,000 or more depending on your age and experience. You should also budget for petrol or diesel costs based on a forecast of your mileage for the year. Particularly important these days, with the rising cost of fuel. And don’t forget your annual service and NCT.
Time to make a savings plan
With a view on approximate costs, you can start putting the ‘wheels’ in motion in terms of developing your savings plan. Commit to a time by which you’d like to have your new car and use a savings or budget calculator to work out how much you’ll need to save each month to get there. There are some great budgeting and savings calculators on the CCPC website www.ccpc.ie
If, for example, you opt to go the second hand car route and you’ve defined a cost of €2,500 over 8 months, that’s approximately €312 per month.
No place for tyre kickers
Savings momentum can be difficult to maintain when other things tempt you to spend your hard earn savings. Here are a few tips to keep the show on the road
- Picture this: Pop a picture of your new car on your phone as a screen saver or somewhere else very visible to you as a reminder of what will soon be yours to keep your savings goal in sight.
- Don’t overstretch yourself: Be prudent about what you can genuinely afford to save each month. Start by reviewing your monthly spending habits to see what you might be able to do without. Then put the savings made towards your new car.
- Open a Savings Account: Saving regularly in a dedicated savings account that gives you access to your money at short notice, but not so often that’d you’d be tempted to dip in and out all the time.
- Motivate yourself: Regularly check in on your savings goal target monthly.
Savings hacks to make you go vroom
- Paying in cash: Paying with cash is normally the cheapest way to buy your car. Even if you can’t save enough to buy the car in full, you could save as much as you can afford to pay a large deposit which means you potentially have to borrow less and pay less on interest.
- Finance options: Some people just don’t have the money upfront to pay for their car and may have to look at finance options to support them. Having a deposit saved means you’ll need to borrow less and therefor pay less interest.
- Tax upfront: When it comes to tax, you can save a few quid if you pay the annual amount up front. You’ll end up paying that little bit extra if you renew every 3 or 6 months.
