You’ve saved up enough money to buy a car. You’re ready to go to the nearest dealership to make the purchase and drive off the lot with a brand-new ride.
But wait! Before you make this big financial decision, you should ask yourself whether you can actually afford a new car. There are other expenses that you have to take into account.
What are they?
After you buy your vehicle, you’ll have to pay a registration fee. A registration certificate proves that your vehicle is legally permitted to go on public roads. Driving your vehicle without this certificate is illegal and will result in a fine.
Your registration certificate will need to be renewed every 1-3 years, depending on your state’s laws. The cost of renewal varies state by state. Some states charge a flat fee for car owners, while others base the fee on factors like the car’s age or weight. Check the vehicle registration fees in your state to see what you can expect to pay.
Another expense that you need to think of? Insurance. Car insurance is mandatory in almost every state — only Virginia and New Hampshire don’t require it.
How much will it cost you? According to the Insurance Information Institute, the average annual cost of car insurance in 2019 was $1,070. Certain things can increase the costs, like your age, your location and your driving record. If you have several traffic violations under your seatbelt, you can expect your insurance costs to be higher than the national average.
You never know when your car’s engine will stall, or its front tire will burst, leaving you sitting on the shoulder of the highway and calling a tow truck service for help.
How can you prepare for these expenses? Get roadside assistance coverage. You can add roadside assistance coverage to your current insurance plan, or you can sign up for an auto club membership (for example, the American Automobile Association).
Another option is to set up an emergency fund. You can use your emergency fund to cover urgent car-related expenses, along with other emergencies like home repairs and appliance breakdowns.
What if you don’t have enough in your emergency fund? In times when your emergency fund is low, you can try to apply for a personal loan online to cover the urgent costs. Look for online loans that are directly available to your state. So, if you live in St. Louis, you should specifically search for personal loans in Missouri to cover your emergency. You’ll know for sure that you’ll be able to apply in Missouri.
You should only use personal loans for emergencies. They’re not meant for everyday expenses, like fuel.
Your vehicle won’t be of much use without any fuel in the tank. Sadly, gasoline is really expensive nowadays. It recently hit a nationwide average of $5 per gallon. If you need to drive often, you’ll have to dedicate a significant portion of your budget to this expense.
You’ll need to bring your car to a mechanic for “tune-ups” at least once a year to make sure it’s running smoothly. Skipping this routine maintenance will affect the condition of your car and could end up costing you more in repairs later down the line.
You may need to purchase a permit to park in a specific location, whether it’s a residential street, parking lot or multi-level garage. Without this permit, you could collect a lot of parking tickets.
Having enough to buy a car isn’t enough. You need to have enough to own it.