Buying a car can be both exciting and stressful, particularly if you are not financially prepared. Ensure that your vehicle doesn’t become a purchase you regret by following these tips:

Budget, budget, budget

Will you be able to afford the car you want in the long run? Remember, a car isn’t just the installment and insurance. You’ll have to think about fuel, wear and tear and general maintenance.  Before signing on the dotted line, draw up a budget and look at your other expenses carefully. Do not to let your car take up more than 30%-35% of your salary. If you already have a considerable amount of debt, look into settling that before buying your car.

Have a large deposit (if you can)

Aim to have a deposit that is higher than 10% of the value of your car as this will reduce your monthly payments or the repayment term. One way to save up for your deposit (and prepare yourself for car ownership) is to open a savings account over a few months where you deposit the amount you can afford for repayments. When you are ready, you’ll have a deposit set aside and you will have prepared yourself for the monthly payments too.

Fixed or variable interest

Financing options are critical, so think about whether you want to go with a fixed or variable interest rate. With a variable interest rate, economic conditions play a big part and rising interest rates will affect the value of your monthly payment. A fixed rate offers more stability, although it will be slightly higher than a variable rate. The current prime lending rate is 10.5% but banks determine the rate you pay according to your credit profile.

Be assured and insured

Insurance is a must-have for any car owner, but cheaper isn’t always better. Be honest about the kind of driver you are and choose adequate insurance cover. You don’t want to be under-insured in the event of an accident.

Tsamela is a recovering debtaholic, financial markets enthusiast and founder of piggiebanker.com – a personal finance site. You can follow her on twitter: @PiggieBanker