Saving for a Car
Ally Nissen, Bridget Hoban, and Katie Wheeler
Toyota Camry 2013 - $22,000 2010 - $13,000 2007 - $9,000 2003 - $6,000 2000 - $3,900
What financial information do you need?
You need to know your income and figure out a budget. For this presentation we are going to make the budget $4,000, because the person makes $8.50 an hour and works an average of 12 hours a week making $5,300 a year. They have to save at least $80 a week.
What financial decision-making stragegies can you use?
You need to decide if you want to buy a new car or a used car, you should also consider the fact that your ideal car might not work out for you financially, you might want the newest model of a car you like but it might be a better option for you to get a slightly older used model to work out better for you financially. In this situation with a $4,000 budget the person only has the option of buying a used car.
When buying a car, new cars and used cars both have pros and cons. New cars are most likely going to have better gas mileage with fewer repairs, but they will probably cost at least double what a used car will cost, so a new car is a wiser decision if you are an experienced driver and have a larger income to pay a car payment rather than paying for repairs and gas. In this case the person is a student and can't afford a new car. Used cars have the possibility of repairs and might have a lower gas mileage, but will cost much less and for a younger driver might be a better idea because they are less experienced and may cause damage to their car.
You should also think about how much you will be driving your car and how far you will be driving, if you are driving a lot and far you might be better off looking for and comparing cars that are smaller and get better gas millage.
Calculation of future Expenses of Budgeting
Having a car comes with great future expenses. Just because you paid for the car doesn't mean you’re done. You don’t buy a car just to look at it, you have it to drive to school, a job, anywhere. To be able to legally drive it you need car insurance. The price of car insurance can vary (on average $1,100 per year), depending on the type of car, your age, gender, even grades! Not only does it cost money just to drive it, you have to pay for gas just for your vehicle to move! (Plan on around $2,300 per year) This also varies, depending on size of vehicle. You’d think insurance and gas is all that’s left after buying your vehicle. Wrong! Your vehicle will need oil changes as well. Not everything will always go well with your car. Repairs can cost a fortune! Always be sure to calculate and budget for future expenses! Spend wisely.
Considering all of the above this student's best choice was the 2000 Camry. It was in their budget and still met their daily requirements.