Tips to Help You Determine Whether You Can Afford to Buy a Car as a Recent Graduate:
Once you secure your first job as a graduate, you finally have the money to purchase things that you need in life. You no longer have to depend on your parents to assist you because you can do it yourself. However, with that freedom comes a range of responsibilities that often require money. This is when you realise the importance of budgeting for the things you need and making purchases that make financial sense.
For example, you are interested in purchasing a vehicle now. And while you have a job that pays, you need to do your research to see that this makes financial sense to you and your budget right now. This is where we come in. Below is a guide that helps you determine whether you can afford to purchase a vehicle right now.
Look at your expenses
Before any big purchase, you first want to look at your monthly expenses and how much of your income you really have at your disposal. Your monthly expenses can include rent, cellphone contract, gym membership, student loans and other necessities that you pay for every month. From there, you can determine how much money you have to purchase a vehicle. But, make sure to use only 30 percent or less of your disposable income when you do this. The South African economy is always fluctuating, and you need to ensure that you have a financial buffer that can help you should petrol, maintenance or insurance costs increase.
Buying a vehicle and not being able to survive the loan instalment won’t help you in the long run. Plus, as a recent graduate, you should have money available to do other things that bring you happiness, such as going out with friends, taking trips and any other entertainment that brings you joy. Your hard-earned money shouldn’t only be for bills but also to help you manage your lifestyle. Plus, when you go to a lender to get financing, they will check your affordability and see whether you can qualify for financing. They won’t pre-select you for financing if you cannot afford the vehicle. If you see that your expenses are too high, you can find ways to cut back. This can be moving to a more affordable area or getting a roommate, opting to eat out two times a month rather than every weekend or cancelling your gym membership and working out at home. All those cuts on your spending can help you afford the vehicle you need.
Shop for vehicles
To get an understanding of the cost of vehicles and what your potential loan payment can be, you need to do adequate research on vehicles. As a recent graduate, you may not know much about vehicles or which ones are more economical. So, shop around to see what type of vehicles are available, which ones you are interested in, and how much they cost. You can view brand new vehicles as well as second-hand ones to see which makes more financial sense for you. We advise that you choose a second-hand car as you’re able to save a lot of money while still getting a vehicle that is in good condition. When shopping and doing research for vehicles, this can help you see what cars graduates can afford in South Africa and what benefits they can offer you. Those benefits are personal to your needs; for instance, are you looking for a vehicle with good fuel efficiency or advanced technology features that help you while driving?
Determine the additional car costs
When checking your car affordability, it’s not only about the price of the car you’re buying. It’s the cost of petrol, maintenance, repairs and insurance that you also need to account for. Knowing all this information can help you keep your car costs low. For instance, some vehicles have scarce car parts, which makes their repairs a little more expensive. Some cars use a lot of petrol, and if you work far from your home, the cost of fuel can add up in the end. Plus, insurance can depend on the vehicle you own and how long you have had your driving license, and all these expenses may be small, but they can add up before you know it. When determining your affordability, you need to consider all these factors. This ensures that you choose a vehicle within your affordability and that it doesn’t become a burden later.
Use a car affordability calculator
Before you apply for graduate finance, you should use a car affordability calculator. Since you don’t have a payment history, lenders cannot vet you on how well of a payer you are from your past credit activities, so they look at your affordability. Before you apply, you can use a car affordability calculator and based on your salary, you can see whether you can afford a vehicle or not. Many lenders have affordability calculators available that can help you determine the cost of buying a car and whether you can afford it right now.
Final thoughts
Purchasing a vehicle is a major milestone as you enter this new chapter of your life. And, while it has many benefits, you need to consider all the responsibilities that come with owning a car and see if that works for you in your current situation. Be sure to assess your budget, shop different dealerships, consider the additional costs and make sure that you end up making a purchase at the right time for yourself. There are many vehicles available that come at competitive prices, but it all depends on what you can afford. Remember, you’re only starting out in your career, so you don’t want to take on too much. But, if you follow these tips, we’re sure you will make the right choice for yourself, your needs and your finances. Happy car shopping!
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