You’ve probably found yourself on the side of the road wondering how to save money for a car because yours has driven its last mile. A car purchase is something that isn’t fun to make when you are budgeted. It certainly isn’t fun when you have poor credit or no credit and are looking at buying used because you cannot be financed. I have been there a few too many times before. I understand all about needing a vehicle, but not being able to afford a vehicle. Hopefully, my experiences will help you to better know the real useful ways you can save money for a car.
How To Save Money For A Car
Decide what car you want to buy. This really is the biggest thing you can do when you need to know how to save money for a car. There are a few things to determine to make this an easier decision.
- What can you afford as a monthly payment? If you’ve been without a car payment for a few years, this could be looking long and hard at your household budget to see if you have flex money. If you don’t have any “spare” money, it may be looking at what you can eliminate from your budget. If that isn’t possible, then you will need to save to buy a used car outright. While this isn’t always a fun choice, it may be the only choice for some.
- What will you be able to save in a reasonable time to pay for the new/used car with? Look at your savings and ability to save. Get honest with yourself. Is the car you have capable of limping along for another month, or would it possibly last year? Determine how long you can manage with what you have, and then figure out what you would be able to save toward a new car during that time. Sometimes the answer is nothing or not much, but there are other options to consider I’ll share later if this is the case.
- Is size important? Do you have multiple children and car seats to fit into this car? Do you work in a field where hauling a lot of equipment or supplies in your personal vehicle is necessary? These things are important for making sure you have the space you need. That may mean researching how wide a backseat is and if you would have room to securely place all of the car seats or boosters you need. Kia Forte Best New Compact Sedan: Luxury Became Affordable
- Is gas mileage a factor to consider? If this car is used to commute to work, you really want to consider the average gas mileage it gets. Sometimes, this is hard when you have to have more room for kids or work related needs, but that is when it’s time to research the best options for your needs. Smaller cars or hybrids are best for gas mileage, but if space is an issue you may want to look at crossover vehicles or smaller SUV’s.
- Be sure to read: Five Things You Should Ask Before Buying Your Next Compact Car
Determine what your financing capability actually is. This is the time to really get honest. There are a few things you’ll want to consider, and it may be well worth your time to make a visit to your bank and ask a few questions. Before you know how to save money for a car, you need to know how much you have to have.
- Check your credit score. To get financed through a car dealership, you will need a good credit score and a down payment of some kind. This is often the value of the older car you trade in, but if your credit score is low you may have to provide additional funds for a down payment. Typically, if you credit score is under 600 you are going to need a sizeable amount down payment to get financed for a new vehicle. Used vehicles at a lower rate may not be as difficult to manage.
- Check with your bank for better financing options. Sometimes if you have a bank account and savings account in good standing, your bank will offer better interest rates and lower down payments than the banks used at most car dealerships. It is well worth you time to sit down with a loan officer and discuss the possibilities. They will also be more willing to give you an honest idea of what you can “afford” since they are not the ones trying to sell you a car.
- Check with both new card dealerships and local used car lots. If you can’t get financing through a new car dealership, there are most likely a few used car lots nearby to check out. These can be a bit more work on your part, and they often mean you pay more for the car in the long run, but sometimes if you are in need – it is the best choice you have. Check for their interest rates, loan options, credit score requirements or even simply if they will give a loan to someone who is self-employed. That is a problem for me when seeking a loan, and is something that needed time to figure out how to manage.
Create a realistic savings plan. Once you’ve figured out how much you need for a new car, and if you are going to be able to finance it easily, it’s time to start really figuring out how to save money for a new car. It’s all about realistic savings plans. The hard part about this, is some people are in a place where a new car is needed immediately. If that is the case, there is no saving involved – there is just scrambling to figure out how to manage in the moment. That is a whole other post by itself. For now, let’s focus on if you are able to stay with your current vehicle for a length of time, and how to set yourself up for a decent savings plan.
- Go over your budget with a fine-toothed comb. We’ve often talked about simple tips like couponing, stopping entertainment, stopping the splurges and similar methods to find room in your budget. Those are all great places to begin. Create columns of wants versus needs and eliminate as many wants as you possibly can. But what happens if you already do that? What about if you are already living paycheck to paycheck? This is when it’s time to go back over every little thing on your budget and really look to see how you can strip away added expenses.
- Revisit rent or mortgage options for lower payments. Downsizing is an option for some, but may not be for others. Ask about discounts from landlords if you take on things like helping them maintain their rental property (mowing lawns, etc.), or look into a refinancing option at the bank if your credit score is decent.
- Track all of the hidden fees and negotiate for their removal. Cellular phone plans, energy costs, cable costs, Internet costs all have little fees. Some are necessary, but others may be places you can slim down your expenses. Ask about every fee that isn’t obvious and if it isn’t something you should be paying, ask it to be removed. A common occurrence is for maintenance fees to continue for months after a contract ends, even if they are no longer valid for the customer. Drop cellular phone insurances once a phone is no longer worth the high price. Stop the monthly fee for your DVR if you have reached your contract date end. There are tons of little fees that could potentially be adding up to a $100 or more per month.
- Ask for loyal customer discounts. We’ve told you in the past how we have reduced costs on things like our cellular phone contract as well as satellite contract. This can apply to everything including many insurance plans. It never hurts to ask.
- Consider the second job. For some, this is already happening. For others, it may seem impossible. The reality is, sometimes there just is no other way to make the money you need when you are trying to save money for a new car. A second job can mean a part time retail job on the weekends, or could be babysitting the neighbors kids for a few hours each day after school. We are bloggers and make extra money as virtual assistants doing things like creating recipe posts and similar items for other bloggers to use on their websites. There are jobs out there that can earn a bit of extra income in odd hours. Some may not be fun. Some may not pay much. There are some options to consider. Read: 60 ways to save money for more tips!
- Save refunds and bonuses. One of the most popular methods I hear when someone asks how to save money for a car is to hold onto that tax refund or annual bonus from work and put it toward a down payment. If you have the luxury of time, this is actually one of the best ways to make this happen. Invest your tax refund, holiday bonus or any random bonus income into savings to go toward the purchase of a new car. Alternately, you can use those funds to pay off bills or debt that would free up money in your budget to save for the car purchase.
There is no simple method for how to save money for a car. There are tons of ways to save money, and some will apply while others will not. As we have worked for years in the savings and deal business, it is obvious that everyone is struggling to make ends meet. These tips may help you to make a new car purchase happen, or they may only be a starting point you have to work around. Just remember to take one step at a time and look at everything in the big picture and not just the immediate need. This will help you find better solutions to meet your needs.
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