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Reasons You Should Have A Car Emergency Fund

Your vehicle is more than just a means of transport – it’s also a lifeline of sorts. It enables you to get from point A to point B, and most importantly, to your job. Your livelihood and independence depend on it more than you may realize.

In a society where there is a direct link between poverty and lack of transportation, your vehicle may at times be the only thing keeping you afloat. And if you’re one of the many Canadians who say they would struggle to come up with $2,000 for an unexpected expense, the thought of  major car repair costs may be a big concern.

An emergency fund dedicated specifically to car expenses can be incredibly useful in a pinch – and may calm some of that anxiety. Let’s explore some of the ways a car emergency fund can put you ahead of the game.

Car Maintenance and Repairs

Cars breaking down is just a fact of life. Even the most reliable vehicles get occasional hiccups whether it’s a flat tire of dead car battery.

Accidents and unexpected maintenance issues aside, you really need to have your vehicle regularly maintained to prevent major breakdowns. Regular maintenance like oil changes, tire rotations, and brake pad replacements can range anywhere from $30 – $300. Without this regular upkeep, you could face even more expensive repairs down the road.

If you have a car emergency fund, any car-related expenses – expected or not – are covered and don't have to come out of your monthly budget.

Possible Insurance Deductibles

In Canada alone there are more than 160,000 car accidents per year, and the average person is involved in around 3 car accidents in their lifetime. That means there’s a high likelihood that at some point you may be involved in a car accident.

If you are insured, thankfully the costs to repair your vehicle may be paid by your insurance provider. However, you’ll still have to pay a deductible to get your vehicle fixed, and these can range from $500 to $1000 or more.

With an emergency fund, you can easily pay your insurance deductible and get your vehicle back on the road quickly and conveniently, with minimal disruption to your budget.

Make Car Payments During Tough Times

Occasionally times get tough – you may find yourself unemployed, ill or facing a family crisis. Whatever the situation may be, if you get in a tight spot and your budget can’t accommodate your car payment anymore, simply pull from your car emergency fund and you’re covered.

An emergency car fund ensures that you can make your car payments even in times of crisis, so you don’t face late fees or repossession.

Pay Off Your Car Loan

So, what happens if you build up your emergency car fund and don’t end up benefiting from it? Whatever you do, don’t stop saving – but do consider using some of the funds to pay off your car loan entirely.

This puts your car fund to good use, while also freeing up more money in your monthly budget. With no car payment, you can save more money, start an investment account, or just have a little bit of extra spending cash.

Additional Tips

If you’re wondering how to get started on building your emergency fund, here are a few helpful tips:
  • Reassess your budget. Take a second look at your monthly expenses and see where you can trim back. Then set aside $15-20 every paycheque into your emergency fund.
  • Get a big head start. Get a bonus at work or a big tax return? Use this chunk of money to start up your emergency fund, then continue to add to it each month.
  • Avoid temptation. It can be easy to borrow from an emergency fund with every intention of paying it back, but things happen and before you know it your fund has been depleted. Put your emergency savings somewhere you won’t be tempted to dip into for impulse purchases.
  • Earn money on your fund. The only thing better than having an emergency fund is having a fund that’s accumulating interest. Choose a savings account that gives you a percentage in interest every quarter so your fund can grow even faster.

Get Help When You’re in a Tight Spot

If you run into an emergency car expense and you don’t have an emergency fund already in place, payday loan companies like 310-LOAN can help you get back on track fast. 310-LOAN is more than a payday lender – we’re a safety net. With our easy online approval process, no credit checks, and loans up to $1500, you get the cash you need to keep your car on the road without derailing your finances during hard times. Apply today and get the cash you need within minutes.
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