A car has become a necessity today. It’s not a status symbol anymore. You need a car for traveling purposes. To ensure timely arrival at your workplace, you need to have a car. The big question is: how you can save money to buy your own car.
Don’t worry. We have got you covered.
In this article, you will learn seven smart tips about how to save money for a car.
On average, you should set aside about 10% of your income to get a new car. You should not only consider the upfront cost of a vehicle, but also the base price of the car. Buying a car with a low base price is the best option for you.
Manage your budget
If you want to buy a new car, you must manage your budget. If you are tight on your finances, you must opt for a budget car.
- Give up the warranty right. It means that you will not have to pay an insurance premium. It will lower the cost of the car. Usually, cars come with a three-year warranty coverage. The manufacturers do not want to waste a dollar or a dime repairing your car. If you don’t get the warranty coverage, there will be no maintenance or scheduled repairs covered. It’s important to maintain your car so that it does not require any major service for at least three years
- Don’t opt for all the fancy electronic features that come with a car. They will add up the cost
- Try to go directly to an automaker to buy a car. Avoid dealing with dealers and middlemen. You will save on paying their fees
- The sales tax that you will have to pay will be lower
About loan and car financing
If you acquire a loan for buying a new car, it will affect your finances in the long run, because you will have to pay some amount in down payment. Moreover, the interest that you will have to pay with the monthly installments will eventually lead you to pay more. Therefore, it is better to save a little amount of money every month to buy a new car.
Forget about leasing a car for yourself. You want your own car, not a rented one that sucks up money and leaves you with nothing in the end.
To the nuts and bolts of saving for a car
Once you have the budget, it’s time to search for a budget car that is cost-effective and fuel-efficient. You must conduct thorough research before you decide to buy a new car.
You must check out cars and car dealers who sell budget cars. Check out which automakers sell cars without warranties and special features. Take your time. Don’t rush.
Calculating your budget
The next step is to calculate how much you earn for a month. Keep a check on your monthly spending. You should cut down on unnecessary expenses. Generally, the purchase price of a car that you want to buy should not exceed 35% of your annual income. As mentioned earlier, you should save about 10% of your monthly income to accumulate the amount required to buy a car. You can use the 50%/30%/20% rule to save a good amount of money to get a car in due time.
- Use 50% of your income for your general expenses
- Use 30% of your income for your emergency expenses
- Save 20% of your income in a savings bank account
Fix a limited time period for the saving for attaining a car
If you can save $500 per month, then it will take two years for you to buy a $10,000 car. If you can save $2,000 per month, then in 10 months you will have $20,000. By now you should know which car you can afford for the money that you have saved.
Open a savings account to keep you focused
A better option is to keep your money in a savings account. Continue with this practice, and in three years, you will have enough money to get a new budget car for yourself. Patience is virtue.
Automating transfers directly to the bank from your earnings
If you want to save money to get a new car, you should opt for automatic transfer of funds from your salary account to your savings account. In this way, you just have to transfer a specified amount to your savings account periodically.
Saving money to buy a new car is not easy. But if you are determined to get yourself a budget car, then you can save some money for this purpose. You just have to monitor your spending. It is better to manage your finances and calculate how much money you will need to save for a car.
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