How Much Should you Spend on a Second-Hand Car?
22 Nov 2019
Saving money means making good choices on the two main expenses in your life: your car and your home. It doesn’t matter if you never splurge on anything else – If you pay more than you should for either of these, you might find yourself strapped for cash in other places.
And, well - no one appreciates Mr. Buzz Killington. A, ‘Oh, I’ll just have a starter, no main for me, and the, am, vegetable soup. And water. TAP! Dear god, tap water, none of that extortionate bottled stuff.’ You want to have a little bit of leeway in life, some breathing space - so making wise choices when it comes to the big spends, can really help with the smaller ones. (Like a nice steak dinner.)
So - how much should you spend on your second hand car? It is, of course, completely up to you, and depends on variables such as your lifestyle, outgoings, income etc. As much as we would love the all-knowing, all-seeing, forever-wise finance fairy to appear and make all our financial decisions for us with a puff of glittery dust – alas, we must trust our own judgement. We have though, tried to assist your decision by including a very loose, top level spending guide below, some of which is according to MoneyUnder30.
In the credit union, we could advise you that you could afford €400 per month for a car loan, based on your monthly income, but it’s up to you how long you spend paying off that loan – which is the deciding factor between a newish BMW or a mid-range Ford Focus. Our staff will chat to each individual person about their needs and ability to repay, so if you have a query, don’t hesitate to drop us a line.
So, here are some options to consider:
1. The general option: spend 35% of income on your car
This is more of a catch-all approach. As it is a significant chunk of your income, it might be preferable to be making average or above average wage, have a lot of love for the ole’ motors, and have a capacity to repay over a longer period, if you were to take out a loan.
2. The wiser/frugal option: spend 10% of your income on a car
This will be based on life choices, but spending 10% of your income on a car would be the wise choice – and you may still get a car with acceptable mileage for €2,000-€3,000, based on an average income.
3. The popular option: spend 20% of your income on a car
According to car site Edmund.com, 20% of a US wage is their ‘rule of thumb.’ when it comes to spending on a car. This percentage has to include all of the expenses that come with a car as well – so take this into account when planning how long you have to budget/pay back your loan.
That’s all great, but let’s say I have €7,000 to spend on my car, what do I look out for when spending my money?
In terms of what to know what to invest this money in, just make sure to go for a level up from basic and prioritise the following three things:
1. Car Mileage
As per our article here on steps to buying your first car, watch out for the mileage milestones.
2. Car Colour
If you’re hoping to resell the car, make sure it’s black, blue, silver or grey.
3. Manual gear box
Apparently, according to Ford, 95% of Irish people would prefer manual over automatic, so better for re-sale.
Submit an Online Loan Enquiry
If you’ve decided on the amount you’d like to spend, and need a little assistance, we’d be more than happy to chat to help you figure out the best finance plan. Drop us a query below.