How To Save Money for a Car

How To Save Money for a Car

There’s no denying it: cars are expensive. And once you finally own a car, the costs won’t stop there. You’ll need money to keep and maintain your car, including fuel, car payments, maintenance, parking, and other vehicle related expenses. Ouch. 

While there may be more alternatives to cars – like public transportation, carpooling, or even walking – this simply isn’t realistic for everyone. If you do need a car, here are 4 ways you can save money to purchase one – and afford the ongoing expenses. 

Consider Your Budget

Though the newest and nicest cars don’t come cheap, it doesn’t mean you have to spend more than you can afford to get a car with moonroof, leather interior, and other fancy things. It’s more important that you can create a budget and stick to it. Start by considering both your income and what you can realistically afford. To get an idea, you don’t want to spend no more than 20% of your income on car-related expenses. 

Needs vs. Wants

Everyone would like to have a new car with all the luxury features – however, those additional gadgets come at a steep cost. Though you may have fallen in love with a red hatchback, if safety is your top priority, you may want to consider something else. With some wise budgeting you can purchase what you really need, you won’t ever be able to afford all of your wants. It’s all about prioritization!

Additional Expenses

Remember: the initial car purchase is only part of the cost. Fuel, parking fees, insurance and maintenance is part of the package, too – and these expenses are costly. As fuel prices are largely uncontrollable, choosing a car that gets low mileage can help you save money over time. 

Down Payment

Whether you are going to purchase a new or used car from a dealership, they will require you to make a down payment. It’s the money you pay upfront for your purchase. After that, you’ll typically take out a loan to pay for the rest, and make monthly payments to pay off that loan.

Although it may be tempting to purchase a car before you have an adequate down payment saved off, think about it this way: the more money you can put down, the less you’ll pay over time to pay off your car loan. Plus, car loans generate interest – and the more money you borrow, the more you owe in interest over the lifetime of your loan.