Finance expert reveals tips on budgeting for your dream car

From spacious houses to exotic holidays, there are plenty of commodities people hope to tick off their wish list one day. When it comes to motors, for example, 48% of Brits believe that they're likely to own their dream car at some point in their life.

However, as with most important purchases, buying a car is a significant investment. According to YouGov, 67% of UK adults have a budget of less than £15,000 for their dream vehicle, whereas – more specifically – 22% of drivers are ready to spend up to £5,000.

Regardless of what car type or model floats your boat, there are several ways to afford your dream motor in manageable, actionable steps. Jonathan Such, Head of Sales at vehicle finance company First Response Finance, offers some handy tips on how to budget and be one step closer to your favourite car.

Determine how much you can afford

First things first, it's always important to be mindful of your financial situation and figure out how much you can actually afford. Yes, buying your dream car can be seen as a special treat, but this doesn’t mean you should break the bank or end up struggling with the repayments.

Such said: "To identify the right price range for your pockets, the first step you should take is to review your finances and have a comprehensive idea of how much you can feasibly spend.

"Start by adding up your monthly income, such as salary and any additional money you receive. Then, make a list of all your expenses, from rent and bills to food shopping and general living costs, and subtract them from your earnings.

"This will give you a clear picture of how much money is left for your future car investment, allowing you to determine the amount you're able to put aside for your dream vehicle."

Factor in additional expenses

As well as considering the car's purchasing price, make sure to factor in all the additional expenses that come with owning a vehicle.

For example, you may want to note down fuel or recharging costs, maintenance and repairs, car insurance instalments, and so on. In fact, it's easy to forget that – in the long run – all these expenses can have an impact on your finances, especially if discarded from your budgeting preparations.

By predicting and being aware of additional costs down the road, you'll be able to plan ahead, budget with more confidence, and prevent unwanted surprises.

Research and compare car prices

Once you have a more informed idea of how much you can bank towards your dream car, you can begin looking for the perfect vehicle for your needs and pockets.

When browsing specific models and specs, always keep their purchasing price in mind and compare costs from different dealerships. This will give you a better chance to bag yourself a vehicle that fits both your budget and personal preferences.

For example, if you're looking for options on the affordable side, used cars are no doubt a more pocket-friendly solution for drivers who don't have as much to spend. You'll be able to jump in the driving seat of your favourite model at a cheaper price tag. However, as it's a vehicle that's already hit the road in the past, you may want to plan in advance for more checks and repairs at the garage.

Save money, but set realistic goals

If you don't currently have the finances to invest much upfront, don't worry. There are plenty of ways to set money aside, from limiting expenses on luxuries you don't really need or want to setting up automatic transfers into your savings account.

However, don't make the mistake of stretching yourself too thin. Establishing realistic goals can help you understand how long it will take you to build a pot of money to invest in your dream car while ensuring you don't compromise on your day-to-day requirements or on things you truly enjoy.

Check out your financing options

Car finance can give you the flexibility to spread the costs of your motor into more manageable monthly instalments.

For instance, a Hire Purchase (HP) is a wise option that allows you to make fixed payments over an agreed period of time. After that, you'll legally own the car when the final instalment is covered.

HP—and car financing in general—is extremely useful when it comes to budgeting and affording your dream car. You'll always know exactly how much you need to repay your loaner each month, meaning you can keep your expenses in check and drive your ideal motor without impacting your financial stability.

Thinking about purchasing a car? With these handy tips in mind, you can jump behind the wheel of your favourite vehicle while keeping your pockets as happy and healthy as can be.