You’ve been dreaming about it since your 16th birthday: hitting the road, unencumbered by parents or driving instructors, and receiving the keys to your very own car! Then reality hits and you realize, cars are expensive. Not only the initial cost of a car, but the gas, the maintenance, the insurance! It can all be a bit daunting and may leave you asking yourself how on earth you’re going to save enough money for a car.
But if you’re on the journey to acquiring your first car, congratulations! As you begin the search for the perfect car, there are a few things you’ll need to do in order to make sure you’re getting the best deal possible. In this article, we’ll teach you how to save money for a car and offer a few tips and tricks to get you well on your way to hitting the road!
Why save up for a car instead of relying entirely on a loan?
When it comes to buying a car, there are a few different ways to go about it. You can save up for a car on your own, or you can take out a car loan from a bank or other lending institution.
There are pros and cons to both methods. Saving up for a car takes time and patience, but you’ll ultimately save money in the long run by avoiding interest fees and using awesome programs that put money back in your wallet. Taking out a car loan may be a more immediate solution, but you’ll end up paying more for your car in the long run due to interest fees.
How do I save money for a car?
When you buy a car, there are two ways to do it: save up for it yourself or take out a loan from a bank.
Saving up for a car takes time and patience, but you’ll ultimately save money in the long run by avoiding interest fees. Taking out a car loan may be a more immediate solution, but you’ll end up paying more for your car in the long run due to interest fees.
Here are a few tips to help you save money for a car:
1. Figure out how much you can afford for a car
The first step is to figure out how much you can afford for a car. This means taking a look at your budget and understanding your monthly income and expenses. Once you have a good idea of how much money you have available each month, you can start setting aside money for your car fund.
2. Set a budget
One of the most important tips when it comes to any major purchase is to set up a budget and stick to it! Determine how much money you can realistically set aside each month to put towards your car fund. Once you have a budget in place, it will be easier to make consistent progress towards your savings goal.
3. Set up a savings account
If you don’t already have one, setting up a savings account is a great way to save money for a car. This will help you keep your car fund separate from your other expenses and make it easier to track your progress. Plus, many banks offer interest on savings accounts, so you can earn a bit of extra money as you save!
4. Automate your savings
If you find it difficult to stick to your budget or make regular progress on your savings, consider automating your savings. This means setting up a recurring transfer from your checking account to your savings account each month. This way, you’ll never have to worry about forgetting to save money for your car! You can also set up with specific programs that systematically put money back in your wallet as you spend.
5. Consider additional expenses
When you’re budgeting for a car, it’s important to consider additional expenses beyond the purchase price; there’s a lot more to owning a car than just handing over the cash and taking the key. Things like insurance, gas, and maintenance can add up quickly, so be sure to factor those into your budget as well.
6. Trade-in or sell your old car if any
Maybe this isn’t your very first car, you can make that work to your advantage! If you already own a car, you may be able to trade it in or sell it to help cover the cost of your new car. This can be a great way to save money, but make sure you do your research first to make sure you’re getting a fair price for your old car.
7. Ask for a raise at work
If your current income isn’t enough to cover the cost of a new car, you may need to consider asking for a raise at work. This can be a tough conversation to have, but if you’re confident in your value to the company and you have a good case for why you deserve a raise, it’s worth giving it a shot!
8. Pick up a side hustle
Another option if you’re short on cash is to pick up a side hustle. Many young adults are picking up additional work on the side of their regular job to rake in a little extra cash. This could be anything from dog walking to freelance writing. There are endless opportunities out there, so take some time to explore what’s available and see if there’s anything that could work for you.
9. Limit unnecessary spending
A car is a big purchase, and you may need to really work to save up the money you need to buy one. When it comes to saving money, you need to be mindful of all of your spending. This means cutting back on unnecessary expenses like dining out, shopping, and entertainment. It may not be the most fun way to spend your time, but if you’re serious about saving money, it’s important to cut back on unnecessary spending.
10. Calculate your down payment
When you’re ready to buy a car, one of the first things you’ll need to do is figure out your down payment. This is the amount of money you’ll need to put down on the car when you purchase it. How much you should aim for will depend on your budget and the price of the car, but a good rule of thumb is to aim for 20% of the purchase price.
11. Establish a realistic timeline
Buying a car is a big financial goal, and it’s important to be realistic about how long it will take you to save up the money you need. For example, if you’re hoping to buy a $20,000 car and you can save $500 per month, it will take you approximately 40 months, or just over 3 years, to reach your goal. Of course, this will vary depending on your income and spending habits, so be sure to do your own research and establish a timeline that makes sense for you.
12. Decide if you want a new car or a used car
One of the first decisions you’ll need to make when it comes to buying a car is whether you want a new car or a used car. There are pros and cons to both options, so it’s important to do your research and decide what’s best for you.
In general, new cars will be more expensive than used cars, but they may also come with lower interest rates and longer warranties. Used cars, on the other hand, can be a great way to save money. Just be sure to do your research and buy from a reputable dealer.
13. Check for fuel efficiency
When you’re looking at cars, it’s important to pay attention to fuel efficiency. This is the amount of fuel that the car uses in relation to its size and weight. A more fuel-efficient car will use less gas, which can save you money over time. You can usually find this information on the car’s sticker or on the manufacturer’s website.
14. Determine the vehicle you want
Before you start shopping for cars, it’s important to take some time to really think about the type of vehicle you want and need. This will help you narrow down your options and make the car-buying process a lot easier. Do you need a large car to accommodate your family? Or would a smaller, more fuel-efficient car be a better option for you? Consider your needs and wants carefully before making a decision.
15. Compare prices at multiple dealerships
When you’re ready to start shopping for a car, it’s important to compare prices at multiple dealerships. This will help you ensure that you’re getting the best deal possible. It’s also a good idea to research the cars you’re interested in online so that you know what to expect when you get to the dealership.
16. Learn how to negotiate a deal
One of the most important aspects of buying a car is learning how to negotiate a deal. This can be a tricky process, but it’s important to remember that you’re the one in control. Be sure to do your research and come into the dealership prepared to negotiate.
17. Buy a car that aligns with your budget and timeline
Once you’ve done your research and found the perfect car for you, it’s important to make sure that it aligns with your budget and timeline. This means that you shouldn’t spend more than you can afford on the car and you should only buy a car when you’re ready, both financially and emotionally.
18. Keep saving for maintenance
Even after you’ve bought your car, it’s important to keep saving. This is because cars require regular maintenance and repairs, which can be expensive. By setting aside money each month, you’ll be prepared for anything that comes up.
How much should you put down on a car?
According to a recent study by Edmunds, the average down payment for a car in the United States is just under 12%. This number will vary depending on the price of the car and your personal finances, but it’s a good idea to have at least 10% of the total cost saved up before you start negotiating with dealerships. Of course, the more you start with the better, as that means you’ll have more negotiating power and may be able to get a better interest rate.
If you’re looking for the best car for the money, it’s important to do your research. You can start by checking out websites like Consumer Reports and Edmunds, which provide expert reviews and ratings of different cars. It’s also a good idea to test drive several different cars before making a final decision. And, of course, be sure to compare prices at multiple dealerships before buying.
If you’re looking to save money for a car but aren’t sure how much you should save for a down payment, the best thing to do is to start by doing your research. Compare prices at multiple dealerships and be sure to negotiate a good deal. It’s also important to keep saving for maintenance and repairs. And, finally, be sure to buy a car that aligns with your budget and timeline. By following these steps, you’ll be sure to get the best car for the money. It may be tough, it may take some changing of habits, but in the end it will be so worth it!
If you’re still curious about saving for a car, reach out to Budgetnista today to book a consultation or check out our financial resources and tools found on the website. Get started on your journey today!