Learn how to save money for a car while you’re managing your other bills.
It’s easy to learn how to save money for a car once you have the motivation. While your friends and family might be walking and riding the bus, there’s something about owning your own automobile that instantly helps you feel more independent and secure. Just being able to drive further out for job opportunities gives you a leg up in life, so strap yourself in and prepare to learn how you can afford your own wheels.
Buying New vs. Used Cars
New car sales have monster appeal, but you may find a used car in good condition is a better value. New cars lose a tremendous amount of real value as soon as you drive off the lot. The first year of depreciation can cost you a quarter of your investment. For many buyers, that new car smell just isn’t worth it.
Other buyers may feel their only option is new. Once at the car lot, a salesman may inform you the only financing you qualify for targets new cars. That’s why you should always show up at the lot with your own financing—or better yet, enough money to pay in cash.
Whether you plan to buy a new or used car has a big impact on how much you need to save before you buy. A new car may require less than 10 percent down where a used car loan often requires 20 percent or more. You can find many good used cars, too, for just a few thousand dollars.
Create a Car Savings Strategy
Once you know how much you’ll need to put aside, you can design your own car savings plan. Divide the amount you need by the months you have available to save, and you’re left with the money you need to pack away to reach your goal each month. If that number is too big, obviously, you’ll need to readjust for your working budget. Otherwise, consider these three easy ways to save toward the purchase of a new car:
- Crunch your budget. Begin by transferring 10 percent of your paycheck into a savings account. Boost it to 20 percent—and then higher—until you’re struggling because of it. Most people waste money here and there when it’s available, so all by itself, this tactic can help you save a bundle without serious changes to your lifestyle.
- Put your installment services on hold. Internet, cell phone, newspapers and other monthly expenses can often be put on hold when you’re on vacation. You can request this at other times of the year as well. Some businesses have no restrictions. The important thing to remember is your contract will be extended by the number of months your services are on hold.
- Renegotiate loan payments. Your student loan and your mortgage may give you options capable of saving you hundreds each month. Simply call and request temporary lower payments and explain the circumstances. If your financial institution doesn’t offer the option, consider refinancing. The interest on mortgages especially is the lowest it’s been in years.
Timing Your Car Purchase
While you can’t plan for big savings, you can still manage to find them by purchasing your car at the right time. While late summer/early fall is the sweet spot for new car pricing, so is anytime your salesperson wants a boost. According to AutoTrader, going in an hour or so before a dealership closes or at the end of the month can lead to the best pricing available any time of the year.
Visit your nearest Title Tree store for more tips on how to save money for a car – or if you need a little help making ends meet right about now.