It is very possible to save regardless of your financial situation. Going with a well-defined goal ad a clear plan t reach that goal is the best key to cultivating a habit of saving. It is not different when you are trying to save for a car purchase. It can seem a little daunting when you are trying to save for a car even though it does not have to be. Saving for a car purchase should be approached with the same realistically set plan and goal as you would plan for other things. This would give you the reality that purchasing and affording a car within your budget is very achievable. We have highlighted some tried and true steps you can follow so as to purchase your car.
- Decide how much car you can or want to afford
After you must have made the decision of buying a new car, the next step is to decide the price range of the exact type of car you want. A monthly car payment is not evitable if you are not purchasing the car in full. Here, you will need to make a decision of the exact amount you can fit comfortably in to your budget every monthly before you take a step further in to commitment in to a loan.
At this point, you’ll want to take a close look at your monthly bills to get a good idea on how much money is not already allocated. Bear in mind that owning a car also means car maintenance. Make sure to leave room in your budget for things like oil changes.
It’s recommended to consider insurance costs for your car, as well. This will be another monthly commitment to expect, and costs can greatly vary depending on the car you choose, the insurance company and their rates, and your driving record. When you have a particular car in mind, a quick call to an insurance company can provide you with a quote to give you an idea of what your costs will be.
- Calculate your down payment
Calculating how much of a down payment is the next thing after the car budget and monthly payment has been decided on. The decision of what your monthly loan payment will be is decided by the car price, loan APR and how much money you plan to put down on the car together. The less you have to finance making your monthly payments lower when your down payment is high. There are online auto loan calculators you can use to know the amount money will be required as down payment. You can use the one provided by your bank.
- Pick a due date
You will need to decide on the time frame you plan or need to have the car purchased after calculating car affordability and down payment requirements. Your savings for the car is influenced by how early you need to buy the car. For instance, if you previously calculated your required down payment to be $3,000 and you need to purchase the car in 8 months, you’ll need to save $375 per month to meet this goal. The $375 will need to be a firm savings commitment each month that can’t be missed. Make a habit out of your monthly savings goal by taking your designated savings amount out with each paycheck and setting it aside. Or, if it’s easier for you “out of sight, out of mind”, often employers will give you the option of having a set amount automatically sent to your savings account each pay period.
- Save, save, save
For your daily financial target to be met, you need to cut off unnecessary spending as soon as you can. It is even more important when there is a savings goal set in place. Some of the things that can add to your spending like cooking instead of buying food, brewing your own coffee instead of buy should be strictly avoided. Check with your cable company to know if there are any savings plans set in place.
- Confidently make your purchase
You carefully planned and saved for your car. Now, you can confidently walk into the car dealer and make your purchase. Going into the car buying process while knowing how much you can realistically afford and with an appropriate down payment makes all the difference and will make for a positive experience.