Buying a car is a complex decision. You need to balance your budget with your wants and needs, which can be a real challenge. Consumers often resort to car loans, especially for new cars. But what is the right amount for this without breaking the monthly budget?? This is the question we would like to address in this guide.
How much can I afford?
The budget differs depending on the consumer and is influenced by various factors. as a rule of thumb, however, the monthly installments should not exceed 15 % of your net income on average. The total cost of buying a car includes the monthly rate for your car, insurance and fuel, registration fees, and maintenance and repairs. depending on where you live and work, there may also be additional costs for parking.
Tip: test your planned budget with our budget calculator
first put your budget to the test. in other words, set aside the calculated amount for the total cost of ownership for a few months. How to make sure it doesn’t put a strain on your finances. Not only will this give you a realistic idea of how much you can afford, it will also give you a better idea of how much you can afford to spend. Waiting a few months also gives you some breathing room to add to your savings for the purchase. You are ready for your new car? Then get more information on suitable car financing here.
Here is how the total cost of a vehicle is made up
What is the total cost of buying a new car?? If a person is 55.000 euro earned per year, your monthly car payment could be as follows:
- Installment for the car: 300 €
- car insurance: 100 €
- maintenance: 100 €
- Fuel: 200 €
- Total cost of ownership: 700 € per month
The above estimates will vary depending on the driver, the type of car and other factors. To avoid the guesswork, get an insurance quote for the car you want to buy. You should also keep track of your gasoline consumption and the number of miles you normally drive to determine the cost of fuel. If you want to determine the average monthly rate for a car, this calculator will help you determine a possible loan and payment amount.
other factors that influence the budget
If you decide to buy a car, you should keep the big picture in mind. Don’t just look at today’s numbers. consider how the cost of buying a new car might change in the coming years. For example, if you don’t have a mortgage payment today but want to buy a house in the next few years, you should leave enough room for that dream to come true. When deciding how much money to spend on your new car, you will also need to consider other financial goals, e.g. B. Savings for college or retirement.
If you don’t have enough money and you already own a car, you should postpone replacing the vehicle until you have improved your financial situation. If you need to replace your vehicle now, consider buying a lower cost vehicle. If you decide to take out a car loan, you should definitely compare the offers of different lenders. You can also do this conveniently and free of charge with an online credit comparison.
For a family with several drivers, the payments for the car can add up. so follow these guidelines to help your family stay within budget:
- If one or more of your cars are already paid off, you should direct a small part of your budget to a savings account. This way you will have a buffer that you can use to pay down your next car when the time comes. This strategy may mean that you can pay cash for your next car and eliminate the car installments.
- Keep your total costs low by alternating your car purchases so that you only have to pay off one installment for one car at a time.
- Plan ahead for new drivers coming in the next few years. remember that even with a used car, there are still costs for insurance, fuel and maintenance.
a single person with an average income of 2.500-3.500 € gross or. A family with children usually can not afford. Most of the time, the maximum possible burden is less than 350 euros per month. In this case, the only thing left to do is to extend the term to 5 years in order to get a 20.to be able to drive 000 euro expensive car. But there is also another way to get more car for small rate.
| 20.000 euro |
| 60 months |
| 258,15 euro (monthly) |
| 2,90% p.A.* |
| 1.489,00 euro |
| 21.489,00 euro |
* fictitious interest rate
balloon financing
Let’s stay with the above example: here would be a financing with final installment (balloon financing) in the amount of for example 7.000 euro interesting. So the buyer only has to pay 250 euro each month.
| 20.000 euro | |
| 60 months | |
| 250 euro (monthly) | |
| 2,90% p.A.* | |
| 1.969,60 euro | |
| 21.969,60 euro | |
| final rate (balloon): | 7.000 euro |
* notional interest rate
This rate also seems too high for most and can only be carried with difficulty. In addition, there is still the question of how to pay off the remaining debt of 7.000 € should be repaid. If the car is to be sold after 5 years (hopefully at this residual value), the game starts again.