Tips for Saving Up for Your Next Car
What’s nicer than a brand-new car? There’s nothing quite like opening the driver’s door to that fresh new car smell, knowing that you have all the latest technology, safety, and features on the market, and that you’re starting over with a fresh canvas with no dents, scrapes, or history of repairs. New cars can be a little expensive, though, so you might be wondering how people manage to afford buying an all-new vehicle. With a little budgeting and saving, you’ll be well on your way to get a new set of wheels.
First, you need to take a look at yourself in order to determine a good budget. You might have dreams of driving off the dealer lot in a fancy new luxury sedan, but the truth is, you need to have a good idea of what you can afford. Look at your income – how much you take home after taxes, not your gross pay – and think about how much money you need for monthly expenses like internet, cell phone, electricity, and other utilities. Once you’ve got that figured out, you have an idea on how much money you can set aside for personal use every month, and how much you’re capable of putting towards a car.
After that, cut corners wherever you can to add to your savings. A lot of grocery stores, for example, have free rewards programs that offer exclusive coupons and savings to members, so do your research. Use coupons and gift cards whenever you can – at the store, at restaurants, and even on your nights out on the town. Aim for the cheaper option. A difference of $10 between two products might not seem like a big deal, but over the course of five visits to the store, that’s $50 in savings. Also, if you have the time, try to pack lunch for work or prepare dinner ahead of time instead of ordering out.
So, why are we giving you advice on how to cut corners and save money in every aspect of your life? Because in the end, even if you get approved for a car loan, you need to put down a down payment, which goes towards the total cost of your car – and the larger the down payment, the smaller your loan, and the lower cost of monthly payments you’ll have to pay towards the loan. The goal is to shoot for a 20% down payment. That means, if you’re buying a $25,000 car, you’ll want to save up $5,000.
Setting goals and sticking to it is difficult. Old habits die hard, after all. But if you really want that shiny new car, you can easily achieve your dreams through careful planning, budgeting, and making smart choices in every area of your life. Good luck!