Nowadays, a car is more than just a luxury and a convenience—it is a necessity. Regardless of where you live: in a big city, a town, or a suburb, your vehicle is a valuable aspect in your day-to-day activities. Tasks such as bringing the kids to school, getting groceries from your favorite supermarket, and going to work on time become easier with a good quality and dependable car.
For some, however, owning a car also means additional monthly expenses. Car payments can become a burden if your financial situation is unstable. This can lead to missed payments and ballooning debts.
This is also one of the reasons why getting a government-approved consumer proposal is a popular option among many Canadians. It is a convenient alternative for a challenging situation, particularly those related to financial obligations, such as car loans..
As such, every consumer needs to understand how owning a car affects your financial situation and offers insights on what you can do to balance both.
In This Article:
Why Owning a Car is More Than Just a Lifestyle Choice
Public transit in Canada is not as comprehensive as in some major cities and countries. This is particularly true in suburbs and small towns, where owning a car is the best option if you want to go from one place to another. In this case, a car is more than just a lifestyle choice—it is essential for survival.
Here are some daily situations or tasks where driving a car is important:
- Going to and from your workplace
- Getting access to healthcare/medical services
- Bringing and picking up your child/children to/from school
- Completing errands and grocery & pharmacy trips
With a car, doing your daily tasks and activities becomes easier, safer, and more convenient. But owning a car also means keeping it well-maintained, which means stretching your budget a bit.
Car Ownership Payments and Expenses
Paying off your monthly payments is not the only expense you need to manage when owning a car. Regardless of how you paid for your car—in cash or through financial assistance, you’ll have to be ready for the additional expenses that come with it.
A Canadian car owner typically spends for:
- Monthly car payments – This applies particularly to car owners who paid through a loan or financial plan
- Maintenance expenses/Repairs – This includes tire and oil changes, brakes management, and unexpected fixes
- Insurance payments – Rates vary according to your location (province) and your driving history. Rates can be steep, too.
- Gas expenses – Fuel prices are unpredictable and this can significantly affect your budget
- Other necessary expenses, such as battery replacements and winter tires
The estimated total of expenses for car owners can be anywhere from several hundreds to thousands of dollars every month. This can cost a big dent in your budget, especially if you have a long list of debts to pay off. It will be harder to juggle your finances if you have to pay one debt after another with a limited budget.
Signs of a Car Loan Financial Trap
If you already have a car and it’s working well but you go out, get a loan, and buy a new one, you have to expect your expenses to blow up. While things might seem bearable at first, your financial situation can become unstable over time.
You need to know the signs that signify your car loan is draining your finances:
- You haven’t been paying your loans on time
- You’ve been using your credit card too much, including for car-related expenses
- You cannot afford to have your car repaired or maintained regularly
- You’re willing to try payday loans
- You owe more than how much your car is worth
If these signs are burdening you, you’ll need to prioritize your overall financial health.
What to Do to Keep Your Car Despite Mountains of Debt
When a person has too many debts to manage, their initial fear is that they might have to give up everything if they want to stay away from the financial trap they are in. Their afraid they might lose their properties, including their car. But this is not the case—at least not at all times.
Since you use your car for your day-to-day activities, it is as essential an asset as your livelihood. So keeping your car is important, and you can do this if you avail of debt relief while trying to pay off all your debts.
You can draft a formal agreement stating that you will settle all your unsecured debts—this is what a consumer proposal is, and you’ll get the chance to pay off everything you owe at a lesser amount without having to file for bankruptcy. If you have an existing car loan and can manage it well, you do not need to include it in the agreement. So you can still drive your car.
How debt relief can help:
- Your unsecured debts are consolidated into one monthly payment
- Put an end to wage garnishments and collection calls
- You can keep your car and other essential assets but this is dependent on your situation
- You won’t have to deal with bankruptcy and its long-term effects
Your financial situation can be different from your neighbor or officemate’s, but you can work your way through and get back the life you used to have.
Managing Your Car Budget Wisely
Stabilizing your finances is only the first step. Your next step is to make sure that you won’t get into a financial trap again. So, you’ll need to know how to manage your budget wisely. These tips for managing your car budget will help stabilize your finances:
Be a Wise Buyer
- Choose to go with used over new cars – Used vehicles are not only budget-friendly but they’re also easier but they also hold more value than new ones. New vehicles often lose their value fast.
- Prioritize value – Don’t choose a car because it looks cool or is popular; choose one because of its affordability, reliability, and efficiency.
Regular Maintenance is Important
- Regularly basic maintenance matters a lot, especially oil and tire changes.
- Pay attention to unusual signs – If you hear weird noises while driving your car, get it checked at the repair shop. Ignoring such issues can lead to bigger problems and expensive repairs.
Set Up an Emergency Fund
- You’ll have to save up for emergency expenses, such as repairs and insurance, and even seasonal expenses. Keep your emergency fund safe.
- Pay attention to different insurance rates – Check out insurance rates and compare them. Take note of the premiums. Quality first always.
Reduce Usage
- Reducing your car use is not only good for the environment, it is good for you, too as you can save money. Assign days when you can walk, bike, or go on a carpool instead of drive your car.
- One trip, multiple errands – Schedule multiple errands on one day so you can save on your trips, on gas, and on money.
Conclusion
If you live in Canada, you know how important it is to have a car. It is a necessity, a lifeline. It allows you to move around and travel from your house to your workplace, your kids’ school, the grocery, and other places essential for your day-to-day tasks.
However, when you’re faced with a financial instability, you will need to work on balancing practically everything that you’ve got. You need to manage your finances to a safe level. It might sound difficult but there are options, support, and tools that you can use to make the process easier. You won’t even have to give up your car.
If your car loan payments or car-related credit card debts are giving you sleepless nights, you can turn things around through several government-approved choices designed to help get rid of the financial trap you are in. Once you get back on track, you’ll have peace of mind and be able to sleep better.
