We all want to have our car but the most common question that gets stuck in our minds is how to save money for a car. It might sound difficult but not impossible.
You just need to make the right budget or a plan for that. If you don’t have a huge amount of money don’t worry you can still choose to buy a second-hand car. Buying second-hand is your first car is not a bad idea.
You just need to follow few steps and then you can easily save money and can afford to buy a car. If you are confused about how should I save money for it or what is the right procedure to buy a car. This article will help you to clear all your doubts and tell you the easy way to save money for it.
How To Save Up For A Car
1. Calculate Your Down Payment
First, you need to calculate the down payment if the new car you are buying. Calculating down payment isn’t difficult. All you need to do is multiply the total amount by the percentage required by the lender and minus the value of any trade-in you are having.
If you are buying a new car then you need to save up to 20% for the down payment or if you want to buy a second or old car then you need to save up to 10% for the down payment.
50% Down Payment Car
Rarely do people choose 50% as their down payment because most people choose 20% as their down payment to buy a car. There are some merits and some demerits of choosing 50% as your down payment.
If you choose a 50% down payment for your car then you will lower the monthly payment. You can also avoid negative valuation.
Read More: How to save money each month from your salary?
On the other side if we talk about the demerits of a 50% down payment method then the interest rate you are going to pay will remain the same as a 20% down payment.
2. Budget For Car-Related Expenses
When you are buying a new car don’t forget about the other expenses you need, to manage or keep the car in good condition. Don’t forget that your car insurance, car payment, and other ongoing costs will be part of the car-related expenses.
Don’t Forget About The Additional Expenses
You must be aware of the fact that to maintain the car in good condition you need to take care of it. You need to choose the right petrol or gas for your car. You need to take your car for service timely. These are some extra car-related expenses that you need to plan before buying a car.
3. Limit Unnecessary Spending
If you are planning to buy a car then you have to take control over your unnecessary expenses. Sometimes we buy unnecessary products that are of no use for us. You need to spend money carefully and always stick to your budget. It will help you to save money to buy a new car.
4. Set Up A Saving Account
If you want to save money faster, then you should always set up a savings account for yourself. If you choose the right bank that provides a high amount of interest rate, then it will help you to save money faster. Always compare three/four banks before opening a separate account.
Automate Your Savings
Choose automate the saving process to save money in your saving account. Automate saving is one of the best ways to save your money.
Automate savings plans are very convenient for those who want to build up their savings faster you can easily save your money without manually depositing the funds every few weeks or months.
Tips For Savings
If you are willing to save money then you should start a dedicated car saving account for yourself. It will help you to focus on your car saving. Don’t spend your car saving amount on other products. You should try saving your money at your bank or a money market mutual fund could be a better option for you. You must be aware of the mileage rates also to save some more money.
5. Sell Or Trade Your Current Car
If you already have a car and you want to buy the new one, then one of the best ways to save money for that new car is to sell that old car or trade it. You can sell your old car and then you can add that amount to your car saving account to buy a new car.
You can also trade your old car for a new one. If you choose to trade an old car for a new one then you need to pay less amount of money to the seller. It will lead you to buy your new car easily.
6. Compare Financing Programs
Comparing financing programs is one of the most important things you need to do. Always look at your financing options, interest rates, because it will affect your monthly and the total amount you need to pay for your car.
Calculate the total amount you need to pay. Check or ask about the additional fee. Compare few banks before applying for a car loan.
Be Aware Of The Entire Cost
Check all the documents related to financing and car paperwork. Decide your budget for a car and buy according to your budget. Check all the information about the down payment of your car. Choose the best financing program.
7. Choose Used Car Over New
If your budget is low then you can choose a used car instead of buying a new one. Buying an old car is not that bad an option. It will help you to save money. You can easily afford a second-hand car. We all know that if you want to buy a new car you need to save more money but if you will buy an old car you will spend less amount.
8. Buying Vs Leasing
Many people don’t know that they can lease the new and old car. Most people use to lease new cars. The leasing payment is lower than the loan or down payment.
Leasing is the best way if you are not looking for a car to use permanently. Therefore if you are looking for a temporary solution then you can choose to lease over buying a new car.
Though people rarely choose to lease old cars, it is among the best thing to do when you have a low budget and want a temporary car. Leasing also requires a down payment. Leasing a car is a budget-friendly method to get a car for yourself.
9. Pick Up A Side Hustle
Doing a side hustle is going to help you to save some extra money for your car. You can do many things that will make help you to earn more.
You can earn through working as a waiter at café or restaurants, you can do other part-time jobs. You can choose freelancing and many more thing which will lead you to save money for your car.
Frequently Asked Questions (FAQs)
How much should you spend on a car?
It depends on which model you want to buy or how much money you have to buy a new car. You can spend around $2,000 or $10,000 to buy a new car. The amount you spend to buy a new car mostly depends on you. You can buy an expensive or cheap car it depends on you.
How to afford a car in college?
If you are in college and you need a car just for temporary use then you should go for leasing a car instead of buying. It will cost you less. If you don’t want to lease then you can do some part-time work to save more money to buy a new car.
How to save for a car with a low income?
You can save money for a car if you are having a low income. You just need to make a strict budget and stick to that budget. Don’t buy unnecessary products. Sell those products that are of no use. Try to save more money and utilize your free time by being productive and earn money.
How much does a used car cost?
A used car probably costs less than a new car. If the price of a new car is $5,000 then you can get the same model of that old car at the price of $2,000 or $2.5000. You can also get a second-hand or used car at the cost of $1,000.
How much should I save for a car?
You should minimum save around $2,000-$4,000 to buy a new car. If you want to buy an old or second-hand car then saving around $2,000 will be enough to buy the car. If you want to buy expensive cars then you need to save more money according to their cost.
How much to spend on a used car?
If you are buying a used car then you need to spend less amount in comparison to buy a new car. If the price of the new car is $5,000 then you need to spend only $1,000 or $2,000 for the old used car.
How to save for a car down payment?
If you are purchasing a new car then you should at least save up to 20% for the down payment of the new car. If you are buying a used or second-hand car then you should save up to 10% for the down payment
Buying a new car can be a difficult process or saving money for it can be hard. If you know the right way to how to save money to buy a new car or if buying an old car is cheaper or worth it or not, then it will be easy for you to choose a good car and save money for it.
You just need to stick to your budget and follow some easy steps like try to avoid unnecessary expenses, open a saving account, sell your old car or trade your old car for a new one. These simple steps will make saving money for a car easy. If you don’t want a car for permanent use then you can buy a car on lease.