The freedom you get when you buy a vehicle can be one of the most liberating things, mainly if you depend on public transport and friends to get around.
When you are new in the working world and still climbing up the salary ladder, the temptation to buy a car that will give you the freedom to move around can be alluring. But before you call a dealer near you, knowing if you earn enough to buy a car is essential.
There is a general rule that you shouldn’t be spending more than a quarter (25%) of your monthly income on vehicle-related costs. So, if you earn R20 000 per month, your total vehicle expenses should not exceed R5 000. And this should apply to the entire vehicle expense, including vehicle instalment, insurance premiums and fuel costs.
Here's what to consider before buying a car
- Be honest with yourself – Buying an expensive, beautiful new car that you can show off among your friends and family can be tempting. But it is crucial to be brutally honest when figuring out how much you can afford. While it can be tempting to go over your budget to get a higher quality car or buy a brand-new one, it’s important to remember that it isn’t the only cost of owning a car. There are monthly insurance premiums and fuel costs also to consider.
- Price range options – Start exploring different banks and see what they offer for a person with your budget. Most banks have calculators on their websites where you can calculate the estimated amount, they can loan you. For those with a lower income, Wesbank offers what is called graduate finance, where a person needs to be between 18 and 31 years of age, have a degree or higher diploma attained within three years of the finance application, earn at least R7 500 per month and have proof of employment and qualify through Wesbank's affordability agreement. Once you have determined your budget and what you can afford per month, you can start looking for cars within your price range.
- Get expert advice – Once you have a short list of cars that fall within your budget, start visiting dealerships and speak to them about financing and the best possible deals on the vehicles of your choice.
So, how much should you earn to afford a car? You are ready to purchase a vehicle if your car expenses are at most 25% of your monthly income. If it costs more than 25% of your monthly income, it is best for you to wait until your salary increases. Look for a simple, functional, affordable car for your first vehicle. Do not go overboard and strain yourself financially. If you want to check if you qualify for a car, chat with us on live chat, and we will assist you.
Article credit : AutoTrader
