What Financial Considerations Should You Make When Buying Your Dream Car?

Are you dreaming of finally buying that car you've been thinking about?

Some of us car enthusiasts may dream about buying a sports or performance car, while others want a classic to adore in their garage and perhaps even cruise around in on the weekends.

Contrastingly, more practical car owners may be in the market for a hybrid or electric vehicle, while others are hunting down a family-friendly SUV that can travel with kids, pets, and perhaps even kayaks, bicycles, or surfboards in tow for easy weekend getaways.

Whatever your circumstances, buying a car has some profound financial implications, and there's a lot to consider when it comes to paying for your car.

That's why we've prepared this article for anyone wondering if buying a car is the right choice. In it, we'll detail all the financial considerations you need to make. Read on to learn more.

A significant expense associated with owning your dream car is vehicle insurance. New car insurance can help cover you financially for any costs arising from auto damage caused while you're driving. For instance, if you crash into another car, your insurance will cover the costs of any damage experienced by the other party. Without insurance, you'd find yourself personally liable for the repairs, which could cost thousands. Imagine crashing into a Ferrari without insurance!

In addition to covering any damage you might cause, a comprehensive policy is a type of car insurance that covers your vehicle as well as any third-party property. This means that you could get reimbursed for the market or agreed value of your vehicle, so you can buy another one of your car type if it's written off in an accident.

However, comprehensive insurance can be expensive, so it's worth factoring this ongoing cost into your financial considerations while car shopping. You can use an insurer's website to generate a quote, which will give you an indication of the cost of insurance for the make and model of car you're considering.

You'll want to consider a car loan to finance your purchase, especially if you can't afford the dream vehicle outright. This is a necessity for many people: most new cars cost anywhere between twenty and sixty thousand dollars.

However, not all car loans are created equal, with some sharp differences in interest rates, loan structures, fees and deposit amounts across various lenders. It's worth dedicating some time and effort to researching different car loans and lenders to find a loan that's suitable for you and your personal circumstances. Then, you'll need to figure out if you can afford the scheduled monthly repayments based on the loan amount and interest rate. Various personal loan calculators on the internet can help you with your budgeting.

It also helps to shop around on car sales websites or online marketplaces. Who knows? You might be able to find a deal online - but if you find anything that's too good to be true, then it probably is.

The more you pay on your initial deposit on a car loan for your dream vehicle, the better off you'll be financially for the life of the loan. This is due to the fact that with a more significant down payment amount, your loan principal amount will be smaller.

A smaller principal (amount owed) means less interest fees payable on the loan over its, which also means less interest. This will save you money that can be used for other car-related expenses, including insurance, fuel, maintenance and cleaning. A 20-30% deposit is a decent amount to save towards. This could take you a year or more to save up for, depending on your income.

There's one other ongoing expense worth mentioning, given the rising cost of living that Australia is currently facing. We are, of course, talking about the cost of fuel and the growing importance of fuel efficiency. Fuel efficiency is an essential consideration for all would-be car buyers, as the fuel economy of your vehicle will determine how much bang for your buck you get when paying for petrol.

The manufacturer will state the average fuel consumption per hundred kilometres on their website for each of their models. Still, it is also worth researching fuel efficiency on third party pages like internet forums and Facebook groups where car owners can share their own anecdotal insights. This is because people's real experiences with a particular car might differ from what its maker advertises. You can never be too thorough when researching the car models and makes that you're looking to purchase.

Did you know that electric vehicle engines actually have less moving parts than combustion engines? This is because electric vehicles run on battery energy rather than having to rely on the smooth operation of all the intricate mechanical components that comprise combustion engines. For this reason, it's actually generally cheaper and easier to service electric vehicles. So you save on more than just fuel costs alone.

If finances are a concern, a hybrid or electric vehicle could save you money in the long run. Both hybrid and pure electric vehicles require less servicing and maintenance and are cheaper to run, saving you some vital funds over the lifetime of your car. And once again, you also won't need to refuel your car, since it runs on electricity. So long as you have a garage with access to power points, you can keep your electric vehicle charged up without ever having to swing through a petrol station.

This informative article has covered all the financial considerations involved in buying your dream car so that you can make a fully informed and sound purchase. What are you waiting for? There's no better time than now to sit down, assess your finances and make a decision on whether or not this is the right time to buy your dream car.