Somewhere between 16 years old and my early twenties my taste in cars seemed to mature. Conveniently, so did my bank account. However, as I’ve never really been a ‘car guy’ I still had no idea what kind of money I needed to afford which car.
So, feeling rich with a few grand in the bank I jumped online to find the cheapest used Porsche I could find. In hindsight, I pretty much had my heart set on trading my savings for a complete wreck and am glad I didn’t go through with it – although I do reckon I would have tallied up a legendary amount of Facebook likes on the ‘my new ride’ pic.By this stage I’d decided a newer car was a much better option, however I’d also come to the conclusion that if all I could afford was an embarrassingly bubbly new car with a distinctly feminine name that I wouldn’t want to be seen dead in, then I’d rather not have a car at all.
Enter the epiphany. Having never even owned a credit card, loans were a very foreign concept to me. I’d always worked on a ‘what’s in my bank account is what I can afford’ mentality. After a few overly excited nights spent plugging numbers into a personal loan calculator, working out how I could afford my dream car without getting up to my eyeballs in repayments, I managed to figure out what was feasible.I remember I was actually having a lot of fun entering the prices of cars I’d love to own into the calculator and it would spit out what my repayments would be. In the end, working out what I could afford to pay was dead easy – I worked it out on a weekly basis and just looked at:
How much I got paid
What expenses I had e.g. rent, phone bill, food, travel
What I could stop wasting money on e.g. too many drinks on a night out
How much money there was left over at the end of the week
How much of that I was willing to spend to have a nice car
I did have a little bit of savings that I put towards the car up front which was good because it helped to reduce the weekly repayments.What I learnt was that pretty much everything was up to me – from how long I wanted to spend paying it off (a longer period e.g. five years compared to three reduced my weekly repayments), to how often I wanted to make the repayments (monthly, fortnightly, weekly etc).
The next step was to apply for my personal loan and plug in my income and any other recurring payments I had, such as rent, to find out how much I’d be looking at each week.Once approved and with the permanent smile on my face starting to hurt my mouth, it was time to channel some of that new found energy into a few test drives. It was all happy days from there.