Are car payments eating up your wallet? The cost of two car loans can often be as much as your mortgage. Is it really worth your money to have two newer cars?
A friend of mine was recently explaining how she wanted to quit work and be home more with her kids, but she simply couldn’t afford it. We started talking about some of her large expenses and she proceeded to tell me that her loan payments for her two newer cars exceeded $700. Then, adding in car insurance and registration fees, she was paying out almost $1000 a month for two vehicles. Not much less than she brought home in salary.
Although I didn’t say anything about it to her, I wondered if the cars were really necessary. When you consider the cost of gas, car loans, maintenance and insurance your car is probably one of the biggest drains from your pocket. Many families need a vehicle, but the questions still begs… how many and how expensive of a car do you really need?
Whether you are looking to buy a new car or trying to cut back on some expenses, ask yourself the following questions:
How many cars does your family actually need?
Can you substitute a used car for a new one?
Is your car the best one on the market for reliability and gas mileage?
What is the interest rate on your car loan?
Can you fix an older car, instead of replacing it?
Do you have some equity in your car? Where you can sell it to pay off the loan and buy a cheaper one?
Based on the answers to these questions, you can easily determine if you are spending too much on your vehicles. It is also good to ask whether there are other things more important to you than having a brand new car or the large SUV. By saving money on your car payments you can really open the door to more money in your budget. Thus, allowing you to spend it someone else.
Related Articles:
*Financial Pitfalls: The New Car Mentality
*Saving For a Car to Drive Later
*Saving Money on Car Insurance