Whether you’ve been behind the wheel for decades or are a newly minted driver, getting the money you need for a new car is important for any new car purchase.
Rely on the following strategy to learn how to save money for a car.
Determine your desired payments
First you should decide whether you want to take out an auto loan on your new vehicle or pay outright.
If you don’t want a car loan, then you’ll need to save the entire amount before you go shopping for a new ride. If you plan to take out a loan, determine the amount of money that you’re willing to pay per month on your loan. Also consider the length of the loan and whether you are willing to extend the payments beyond five years.
When you’re shopping for your vehicle, you may be tempted to lengthen the loan for a more expensive vehicle to get lower monthly payments.
This is a common mistake that car buyers make, since it costs them more money in interest payments. Most lending experts recommend not taking car loans beyond the traditional 60-month loan.
Figure out a down payment
When buying cars without a loan, you’ll pay the full price of the car, including registration, fees and the cost of any accessories.
If you are taking out a loan, your down payment should be a sizable percentage of your vehicle’s sticker price, especially if you don’t want to have large monthly payments or you want a shortened loan period.
Determine how long you can go without a new car
How long you’re willing to wait plays a big factor in how much you will pay for your new car. The auto sales business is cutthroat, and many salespeople will to try to get you into a vehicle right away if you let on that you need a new car.
However, speedily sliding into a new set of wheels is going to cost you. Instead of taking time to shop around and scope out the best deal, you’ll likely pay more if you’re in a huge time crunch.
If you have the time to spare, give yourself a few months or even a year or two to save up for the car you want. This gives you time to put aside a down payment or the entire cost of the car.
Make saving a priority
Once you have a saving goal in place, it’s time to start putting money aside for a new car. Make saving a priority with every paycheck. If you have direct deposit with your employer, designate a percentage to go straight into a savings account so that you aren’t tempted to spend the money before you save enough for a car.
One simple trick for saving is to pay off the car you have now and then put the amount of your former car payment into a savings account to save for your next vehicle purchase.
Even though it might be inconvenient to keep making the same monthly payment and you might be eager to get into a new vehicle, you’ll have a significant sum after even a year of saving.
If you’re a first-time car buyer, be sure to budget for other expenses as well. You don’t want to accidentally allocate money for a car while not keeping up with your mortgage and other monthly bills.
You need to know how much you want to spend and how you’re going to save the money you need to make your new car purchase.
Knowing how to save for a car will help you to achieve that goal of buying a new vehicle.