Tips on how to manage the cost of owning a car as a new graduate

The total cost of owning a vehicle can be hard to wrap your head around. 

It’s even more challenging for a new graduate who is only finding their feet in the job market; still figuring themselves out. But as costly as the running cost of a car may be, you cannot ignore the benefits, such as mobility, independence, and avoiding the problems that come with public transport. 

As expensive as it may seem, you have options. If you plan for your car purchase properly, you can ensure that you get a vehicle while still having enough money to take care of yourself. So, read our article below on tips for buying a car and managing the cost of running a car as a new graduate. 

Only buy what you can afford 

The first tip to take into consideration when buying your first car is to look for one you can afford, and not one that you desire. (This can be difficult when you’re “fresh” out of college.) Realistically, the total expense of your vehicle should only cover a small percentage of your salary. This will allow you to focus on other expenses such as your rent, groceries, entertainment and many other expenses. 

The last thing you need on an entry-level salary is to purchase a vehicle that takes half of your income. This will leave you strapped for cash during the month, and ultimately, make your vehicle a financial burden and not a viable solution for your lifestyle. Plus, there is more to owning a car than the cost of the vehicle. You also need to consider repairs and maintenance and the cost of petrol. 

Depending on how far you live from your workplace, or where you plan to drive over the weekends, your petrol amount can add up fast. So, be mindful of putting money aside for other vehicle expenses. 

When looking at your affordability, make sure that you consider your salary and how much money you have left after your fixed monthly expenses. This will give you an idea of how much money you have left. 

Consider a second-hand vehicle 

The best financial decision you can make is to find a second-hand vehicle. 

There are a wide variety of pre-owned vehicles on the market, helping you to find the best second-hand car available. You can find a car that will not only be affordable, but it will be in good condition and one that suits your lifestyle and preference. Buying a pre-loved car versus a new one will help you pay smaller instalments, which gives you leeway to cover other vehicle expenses. 

Think about financing properly

When it comes to purchasing a vehicle, you will need additional financing to cover the expenses, even if you have a deposit. Vehicles are costly in South Africa, so much so that many people cannot afford to purchase a vehicle without financing it. This can be an issue for graduates, as financing needs a credit score, which is almost impossible to have right after university or college. 

Fortunately, some lenders have graduate finance programmes that are tailored for graduates entering the workforce and who have no credit score. Graduate car finance in South Africa will ensure that you have a chance to get pre-selected for your vehicle of choice. If you don’t have a vehicle in mind, lenders have partnered with some dealerships where they have cars for graduates. This will help give you an idea of the type of vehicle you can finance. However, even with graduate finance, buying a car on finance requires thoughtful planning. You need to consider: 

How much money you can afford to pay on monthly instalments. 

The cost of insurance as you’ll need car insurance. Luckily, lenders also have car insurance for graduates, which helps streamline the process for you. So, instead of seeking a third-party plan on your own, they offer you a plan that can be personalised according to your needs.

How long you want your loan term to be. It can be from 6 to 96 months (only if it’s a new vehicle). But, keep in mind that the longer the term is, the higher the interest you will pay.

How much you plan on saving for a deposit. Although it’s not a requirement, it can work in your favour at lowering the car cost and help make you an appealing applicant to lenders.

Keeping these things in mind when seeking financing will ensure that you know exactly how much you can afford when purchasing a vehicle. You can also use an online vehicle calculator that can help you get an idea of the total cost of your loan agreement, as well as do an affordability check. This will ensure that you go to the lender knowing what to expect, which will help make the process easier.

Opt for a car with good fuel economy

There is more to how much a car costs than the cost of the vehicle itself. And that is the running costs. Petrol can easily increase the price of a car without you even realising it. A vehicle with a good fuel economy ensures that oil use is reduced. This is a positive for you as you don’t have to be inconvenienced and you get to save more money. Plus, it also helps improve the environment as there are fewer carbon dioxides (CO2) emissions. For example, the Fiat 500, Fiat Panda, Toyota Aygo, Renault Kwid and the Ford Fiesta are one of the best fuel economy ratings in South Africa. 

Think long-term 

In the excitement of owning, planning long-term may be the last thing on your mind. But, planning long-term will ensure that you not only save money but also find a vehicle that is reliable and can withstand the test of time. For example, a small sporty vehicle may suit your lifestyle now as a young adult, but ask yourself if it will suit your life in the next five years. You want to opt for a vehicle that has enough legroom for you and your passengers, as well as have a spacious boot. This will ensure that your vehicle is ideal for any situation, and you won’t need to buy a new vehicle unless you have to. Make sure that you also take note of the reliability of the vehicle or brand. This will ensure you don’t have to pay a large amount of money for repair and maintenance costs. 

Final thoughts

Owning a vehicle does not need to cause you sleepless nights, or become a financial burden. It can be a great choice that simplifies your life. Whether it’s travelling for work during the week or going out for lunch with friends over the weekend, we advise that you find a vehicle that fits your graduate lifestyle. You are still entering employment and getting used to earning a salary. Do not let the cost of your vehicle stop you from exploring other things that bring you joy. Once you focus on that, finding a vehicle that fits your budget will become easier, allowing you to enjoy the perks of owning your own.

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