Saving money for a new car sounds simple – spend less and build up savings – but it is assuredly not so! It is integral to structure a plan and stick to it, especially in the event of unexpected expenses.
Here are some tips that will help you understand how to save money for a car:
Calculate the car payment
Start by computing how much you can afford to pay out each month when you take out a car loan. Don’t forget to include costs for maintenance such as oil changes or new tires, of course, or any change in insurance costs.
Check out our Car Affordability Calculator now!
There are numerous tools online that help to calculate monthly car payment, along with how much you need down at the time of purchase. Spend a few minutes testing different down payments and payment terms, so you can understand how these parameters affect monthly expenses. However, if you are paying the entire amount upfront, you don’t need to calculate any kind of monthly expenditures.
Check out our Car Loan EMI Calculator now!
Make up your mind about when you want the car
Once you know how much you can afford to spend, including down payments and monthly loan installments, the final element is timing. If you want to fulfill your dream of buying a car ASAP, then you have to save up fast. But please don’t set unrealistic saving limits. Delaying your purchase by a few months to build up more savings can also make a difference in your finances.
Let us talk savings
Sticking to a specific plan is tough, so rather than debating every purchase, make the procedure automatic. For instance, if you have to save $6000 for the next 6 months, tell the payroll department at work (if you have a direct-deposit paycheck) to send $500 in your savings account every two weeks, with the rest sent to checking as usual.
This way you don’t have to worry about your car savings getting affected. If you don’t have direct deposit, you have to go to the bank or transfer the funds online into a separate account for the car.
Don’t overdo it!
It isn’t easy to say a firm “no” to things you want. If savings becomes a daily or hourly battle to pinch pennies, you can seriously stress yourself out.
Compromise with what you can spend and create a reasonable plan you can refer to. For instance, you can skip out on a beach vacation, but going for a day trip to a campground is totally acceptable. Saving up for a car is tedious and takes tremendous effort, but don’t give up, as your dedication and patience will be aptly rewarded when you sit behind the wheel of your vehicle.
I hope this helps you understand how to save money for a car. To learn more check out our Auto Finance section.