Saving for a new car can be intimidating, but it is much easier than it seems if you are prepared to stick to a goal and make financial sacrifices when needed. You may not be able to go to the movies or out to eat as often as you like for a little while, but in the end you will have something to show for it. By following these tips, you can drive home the car you want sooner than you think.
Decide what type of car you need (or want)
So you want a new car. One of the very first things you need to do is figure out what type of car you want. Do you need a car for commuting to work with good gas mileage? Are you looking for a recreational vehicle you can use for camping? Has your family grown and you need more passenger room?
All of these things and more are valid reasons for a new car. Once you figure out what you need, you can move on to the next steps.
Figure out how much you can afford
To figure out how much you can afford, write down all your expenses and expenditures. An expense would be rent, utility bills, grocery spending, and anything you need in order to live. Expenditures are items you buy that you don’t need. This might include cable television, daily coffee shop stops, or buying lunch every day.
Once you calculate this, you can figure out your budget and how much you have left for a car payment. It will also give you an idea on how much you can save each month. Write down your goals on what, why and how you will get there.
Determine your down payment
When you figure what kind of car you need and how much you can afford, you can determine your down payment. The more you can pay upfront, the less you will have to finance and pay each month. Many lenders require you put down some type of down payment, but it varies based on several factors like your credit score and the type of vehicle being purchased.
If you know you need a $1,200 down payment and you want to buy your car in six months, then you know you have to save $200 a month.
Curb unnecessary spending
You will probably have to give up some of your unnecessary spending, such as buying lunch every day or going to the movies every weekend. Don’t completely cut out your self-indulging treats unless you absolutely need to. You don’t want to be miserable while saving for a new car.
For example, you can buy lunch on Fridays instead of every day. Maybe you only go to the movies once a month. These small cuts can add up to big long-term savings.
Set up automatic deposits to savings
It is easier to save money if it is put away before you get a chance to spend it. If you have direct deposit, set it up so the money you need to save each month goes directly into your savings account.
The money left after that can go into your checking account as it normally would. For example, if you need to save $200 per month and get paid twice a month, you can set it up so that $100 is put into your savings each paycheck.
Following these tips can help you save for a new car faster and more efficiently. Don’t let the process intimidate you. Figure out what you need, when you need it and how much you can afford. Then write down your goals like how much you need to put away each month and how you are going to do it. With determination and commitment, you will soon be driving your new car off the sales lot.