Money has been tight for many people this past year. The pandemic has left many with fewer hours or entirely unemployed, supporting friends and family in need, or coping with increased medical costs and other concerns. Whatever your individual situation, though, if you’re looking for ways to revamp your finances this year, one thing you might wish to consider is cutting car-related costs. While some vehicle expenses are certainly unavoidable, many people are overspending in ways big and small – and many of those habits can be easily rectified.
Mind Your Maintenance
One of the most common car ownership mistakes people make is delaying or overlooking important maintenance tasks, like changing your car’s oil or brake pads, and they tend to do this because of cost and inconvenience. That’s why the best way around both of those problems is to learn to do the tasks yourself. It’s easy enough to change your own oil and brake pads, refill the coolant, and perform other basic upkeep tasks. These small labors will save you a lot of money by preventing more serious damage.
Assess Your Loan
While getting your oil changed or learning to do it yourself may seem minor, many other car-related expenses are pricier, such as overpaying on your car loan. Before purchasing a car, then, it’s important to calculate the expected loan to determine what you can really afford, if interest rates are favorable, and other key factors. Not only do people often accept unfavorable loan terms out of eagerness or need, but they frequently overspend on their cars in general.
What is the right amount to spend on a car? When buying a house, there’s a standard rule that you shouldn’t buy a house worth more than three times your annual income, and there’s a corollary for purchasing a car. Based on budget limitations and depreciation, experts have devised a standard that says you shouldn’t spend more than one-tenth of your annual income on the purchase price of a car if you’re trying to save money.
Adjust Your Insurance
Another major car expense, and one you can’t go without, is insurance – but not all insurance is created equal. If you need to save money, then, you have the ability to change your insurance coverage to better suit your needs, and your budget. Though you don’t want to have too little coverage, if you’re working much less now – for example, because you’re working from home and refraining from travel – you might consider a pay-per-mile policy or ask if your insurance provider offers a low mileage discount that you could benefit from. In other cases, simply changing companies can save you money, so it’s always worth looking around.
In many parts of the country, owning a car is a non-negotiable expense because public transportation is limited, but that doesn’t mean you need to spend a lot of money on car ownership. Instead, it’s important to be a smart, responsible car owner. If you prioritize function over flash, though, you can stick to your budget and still get where you need to go.