Is It Possible To Afford A Good Car In Your 20s?
Paying for a car is a huge expense at any time of life. It is even more so when you’re in your 20s. Financially, the years between 20 and 30 are the most difficult. You’re finding your feet in your career. You’re losing money on rent and desperately saving for a deposit on a house. Wages are at odds with the cost of living right now too. That makes it all the more difficult for a twenty-something to afford a car.
When you’re young, your car gives you a sense of freedom. It can help you explore and expand your career options. A small car is a great asset in your 20s. Yet many are priced out of the good cars. It leads us to the inevitable question: can you afford a good car in your 20s? I’m sure we could all afford a beaten-up old banger. However, we open ourselves up to breakdowns and maintenance costs.
What type of car?
Chances are, a luxury car, SUV or saloon are well out of your price range. That doesn’t mean you can’t pick up a great car. Modern hatchbacks are some of the best cars on the road today. If you haven’t got an army of children to look after, a small city hatchback should be top of your list. The Volkswagen Golf, Ford Fiesta and Toyota Yaris are perfect choices here. You could start by looking at the Toyota Autohouse offers. You should find a good balance between cost and reliability.
Buying a new car makes a lot of sense if you can afford it. Try to save up the biggest deposit you can possibly afford. You’ll pay less on the monthly installments and decrease the length of the loan term. The general rule here is to stick to 10-20% of your annual income. In your 20s, this can severely limit your choices. But, if you can’t afford it, don’t buy it. It’s just not worth it. Make sure the loan period is no more than three years. Any more and you’re paying huge amounts of interest.
Other finance options
If a brand new car is out of the question, look at used car dealers. In all likelihood, you can pick up a great deal on a used car. It’s unlikely that you need a flashy, luxurious car anyway. You just need something small and reliable, right? There are other finance options available to you. These include Hire Purchase plans and Personal Contract Plan. Make sure you know what you are getting into with these particular plans. They can be complex and in both cases you don’t own the car until you pay back every penny. Finally, you could look at leasing options. It’s a cheaper way to drive, but you never own the car outright.
You also need to consider the running costs into your calculations. If you are buying a used car, this is particularly important. You may have budgeted for the deposit and monthly payments. But, what about fuel, insurance, taxes and maintenance? Keep a strict budget and there is a good car out there for the twenty-something.