Saving for a car can be a difficult process. Not only do you need good credit to get a car loan with acceptable rates, but you also need roughly 10 to 20 percent of a vehicle’s sticker price in order to make a down payment. That’s why we’ve put together a post on saving for a car, helping you to get your dream car.
According to US News, one of the most important steps is budgeting. Learn how much you can afford by calculating your monthly income and subtracting any expenses. What you have left is your maximum budget for a monthly car payment. It’s also important to account for insurance, fuel, registration, and other fees.
Next, calculate how much you need for a down payment. The rule of thumb is 20% of the sticker price, though the average American pays only 10%. The higher the down payment you can afford, the better your interest rates will typically be.
It’s also important to determine when you need (or want) your new car. Although this might sound like a given, few people realize the impact a few weeks can make in terms of savings. For example, if you are moving soon or if you are getting a new job, be sure to account for an increase or decrease in income as well as the need for transportation.
Finally, stick to the plan. Making savings mandatory is the most important part of saving for a car. Most people find that having their work’s payroll department deposit some of their earnings into a savings account, and the rest into their checking account, helps them to save without dipping into funds. This way, your car fund isn’t affected by routine spending. If you don’t have direct deposit, consider the good old-fashioned money jar.
Not sure if you have enough money saved? Stop by our Finance Department. Tell us what you want to pay monthly, and we’ll do our best to make it become a reality.