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Setting a Budget

By: Tracy Wilkinson - Updated: 5 Oct 2010 | comments*Discuss
Setting A Budget

When buying a car it is important to set yourself a realistic budget of what you can afford, whether this means buying it outright or over a period of time with a finance deal. Having a pre-set amount should mean that you can work out what you can realistically afford, preventing you from paying too much for a vehicle and leaving you out of pocket or potentially unable to pay.

The amount you set aside is entirely dependent on the vehicle you are looking to buy. When you are initially planning your budget you should try to get an average price for the make and model of your choice - you can find these in price guides such as Parkers and Glass's, which are available in both online and as a paperback book.

Set your Expectations According to your Budget

If you have your heart set on a 2 seater sports car then setting a low budget will likely result in you getting a poor example which has not been treated properly or could possibly have something very wrong with it - which is reflected in the low price.

Choosing the Car you Want

So with your price guide in hand you should now know what the current average price for your chosen car is - but be aware this will change depending on the individual vehicle and the options it has. If, for example, you want a model with extras such as satellite navigation or leather upholstery, then this can push the price up a lot more than you'd expect. Consider whether or not you really need these options, or whether there is a cheaper alternative available, such as a portable sat nav system. Certain car colours will also attract a higher cost, especially for more popular colours - so try and keep your options open as much as possible if you want to get the best possible price.

Size Does Matter

You have to be realistic when choosing a car size as smaller cars can often be surprisingly more expensive than their larger counterparts due to their high demand. If you are struggling to find a car of a particular style in your price range it might be worth looking for a slightly larger model which could surprise you and be within your grasp. However you must carefully research this new choice as it will probably incur higher road tax and insurance which could reduce the saving or even wipe it out completely.

Part Exchange

If you already own a vehicle, then part-exchanging this or selling it first can help to increase the budget you have set. Remember to check the guides for the correct trade-in price for your own car and if, for example, it has any benefits that you can cash in on - like low mileage or a full service industry, then remember to adjust the amount accordingly.

Pay In Cash

If you do decide to purchase the car outright with cash or your own finance arrangement (such as a personal loan), then this may well put you in an advantageous position as you can haggle with the seller. Sticking to your budget in the showroom or with a private seller and being prepared to walk away if the car you want is too much can work in your favour .The thought that you might just back out could pressure the sales person or seller into bringing the car down in price and getting you a far more attractive deal.

Just remember that this will only work if the seller really believes that you will leave the car if the price isn't right and experienced salespeople can usually tell if you're bluffing - so make sure that you are prepared to walk away if you have to. If you say that you're going to leave it - and then you don't - they've got you over a barrel and you'll struggle to negotiate with them at all.

Paying with Car Finance

When purchasing a car through finance arranged by a dealer you must be very careful about sticking to your budget - as the sales person could attempt to pressure you into purchasing a more expensive vehicle because of the commission they receive on your finance deal. It's also really important that you check admin costs and interest charges, because these can come as a surprise if you don't read the small print - and they can blow your arranged budget out of the water without you even realising. Make sure you understand the total cost of the car plus finance - and any extras that come with that too.

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