6 Tips to help you save for a new car
Aside from our house, a car is likely to be the second biggest purchase we will make. Before jumping in and making buying that car, you need to sort out how you plan on financing the car, not to mention sorting out exactly how much you have to spend, and the type of car you will be buying. These 6 tips to help you save for a new car will have you well on your way to making the right purchase.
Work out a budget
Before you go any further into the car buying process, you need to sort out a budget. It’s hard to start looking for a car until you know exactly how much you have to spend, and it’s not going to be a financially wise decision to purchase a $70,000 car when you only make $40,000 per year. Decide how much you can comfortably spend without putting astrain on your finances, and stick to that budget when car hunting.
Decide how you will finance your purchase
It’s always better to pay cash for a car, but this isn’t always possible! If you need to finance you car purchase, think outside the square when it comes to lenders. Credit unions such as People’s Choice Credit Union can be a great alternative to the big banks (speaking from experience, I have been with them for the last 10 or so years).
Budget for the extras
The cost of buying a car doesn’t end with the car itself. You will need to pay for insurance, stamp duty and possibly even registration (these costs will depend on the state you live in). Be a little research to find out how much you will be up for, and include these costs in your car budget.
Factor in running costs
Cars will continue to cost you money, even after you have made the initial purchase. There are servicing and mechanical costs to consider, but what is sometimes forgotten is the cost of petrol usage, which varies significantly from car to car. Purchasing a car with a lower petrol consumption could save you massive amounts of petrol, and money, over the life of the car.
Start saving early for your new car
We have owned one of our cars for 9 years now, and it was purchased second hand, so we have known for a few years now that it will eventually need to be replaced. For that reason, we have intentionally been setting money aside for a new car. Cars will not last forever, so it’s always a good idea to include a ‘new car’ section in your budget for this reason. When you do eventually need to replace a car, you will be ready!
Significantly cut your spending for a month
So you know you need to buy a new car, and whether you are paying cash or getting finance, it needs to be paid for. Even if you will be arranging finance to pay for the car, it’s a good idea to out down as large of a deposit as possible, reducing the amount you will borrow, which in turn reduces you repayments. For a month before you make the purchase, make an effort to save as much money as possible, whether you take part in a month long ‘no spending challenge’ where you make no unnecessary purchases, or just actively cut back on some purchases for the month. No matter how large or small of an amount you save during that month, you will be happy you did when it comes time to hand over that cheque. It all helps!
This is a sponsored post brought to you by People’s Choice Credit Union