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WORKING OUT A BUDGET (1)
Finalising a budget is about much more than just
working out the maximum monthly car payment that you
can afford. You MUST also take into account running
and servicing costs, insurance and resale values.
Usually, banks will only allow you to spend a maximum
of 30 per cent of your income on financing a car.
To be safe, this percentage should include ALL costs
related to your purchase.
Firstly, it is often said that the best time to replace
your current car is every three years, if you can
afford it. Remember that maintaining a car becomes
more expensive the longer you keep it, because warranties
expire, and the daily wear and tear will start having
an effect on the mechanical components.
If the new car you are considering comes with a service
or maintenance plan, check which items the contract
covers.
Maintenance and service
contracts
Many new cars are now sold with so-called maintenance
or service contracts. In some cases, these contracts
are on-cost options. Read the fine print on these
contracts carefully, because they don't always cover
the same items. Some cover only typical service
items (oil, oil filters, spark plugs, etc), whereas
others will cover additional items.
Some are “fixed cost” contracts, in
which case there will always be a fee, but this
will remain constant for the duration of the contract.
Then there are those that require “staggered
customer contributions”. These costs tend
to rise with each service as the car becomes older,
but the services will still be cheaper than if you
had no contract at all.
To sum up, when working out your budget, take the
following into account:
 Monthly
payments and interest rates- Insurance
- Petrol/diesel
- Service costs
- Extended warranty or service plan
- Tyres
- Any options you want to add to the vehicle (CD
player, etc)
- Are you trading-in a car? Shop around for the
best offer.
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