So you are planning to buy a new car. You deserve it. You’ve gotten a raise. You’ve been using the same car for years now. The raise is just enough to cover the monthly mortgage. Before you drive this new major investment, think of how much you would have to spend on it on a monthly and yearly basis. The AAA estimates that people spend an average of $9,282 a year on their vehicles. That’s $773.50 a month. Can you afford to let go of that amount?
Imagine how much you’ll need to shell out for Subaru repair costs. Depending on the magnitude of the problem, the average repair bill can go anywhere from $500 to $800. That will grow astronomically if the problem is something in the engine part of the car. That can cost thousands of dollars. At that point, it’s worth asking yourself whether you should keep this car.
But more than the repair (new cars usually do not give you any problem), it is the car maintenance that’s actually costly. Monthly payments, insurance, gas, car wash, fees, and taxes are some of the expenses that you should expect when you own a car. Depending on your loan amount, your average monthly car payment can be somewhere in the vicinity of $554 for a new car or $391 for a used car. Some factors could change this amount, of course.
What happens if you lose your job or your company closes down? The economy is unstable. Plenty of people suffer every day because they have lost their jobs, their main source of livelihood. You’re paying for the car, house, bills, and credit cards. What will happen to you if you lose your only source of income?
It should take more than a raise to push you to apply for a car loan. There are other factors, too, that you should consider. Are you paying for the home mortgage? How much is left with you after the home mortgage, bills, and other debts? Do you have an emergency fund? Do you have iron-clad health insurance that will take care of you and your family if there’s a medical emergency? Do you have in your savings at least three months’ worth of your monthly payments?
When you have a car, you’re also responsible for your passengers and other vehicles on the road. Your car insurance will not always cover every expense that you incur during an accident. You’ll have to shell out some money of your own. Do you have that money? If you become the responsible party of an accident, you also have to face legal troubles. Do you think something like this will never happen? You can never be sure. That’s why it’s important to have an emergency fund for these instances.
Think long and hard before you decide on a major investment such as a car. There’s more to owning a car than driving it around. Yes, it’s a necessity, especially for areas without a good public transportation system. But if you are not financially stable yet, you can be facing a huge problem than easing your transportation burdens.