If you’re interested in learning how to save money for a car, then you have come to the right place.
Buying a car, just like buying a house, can be quite exciting. But it is one of the biggest purchases you’ll make in your life. So you want to make sure you get it right and avoid some pitfalls. For example, are you going to pay for the car upfront with cash or are you going to borrow?
Do you need an auto loan? For most people, auto loan financing is the preferred and most affordable route. Whether you need a loan to finance your car or pay for it right away, you need to figure out how to save money for a car and develop a savings plan to help you reach your goal.
One thing to keep in mind is that you don’t have to get a car loan through the car dealership. It’s often cheaper to get a loan from a bank.
Find out: Get An Auto Loan Quote Today.
How to Save Money for a Car:
Before you start saving money for a car, it’s always a good idea to check your credit file or make sure you have a good credit score. Why is that important?
A good credit score not only can get you qualified for a car loan faster, but also it can save you thousands on interest.
So before you borrow money, get a free credit report at CreditSesame to now exactly what your credit score is and take steps to improve it.
1. Figure out how much money to save for a car.
Figuring out how to save money for a car shouldn’t be a problem once you figure out how much the car will cost you.
Cars are quite expensive. According to TrueCar.com, the average price for a new car is around $38,000. The average price for used cars is around $19,000.
2. Figure out how you will pay your car.
Once you have an idea of how much money to save as a down payment for a car, you need to know which a loan to take out for the car.
It’s always a good idea and much cheaper to buy a car outright than it is to buy it on finance or taking out a loan through a bank. But if you don’t have the cash upfront, you will need to get a car loan. If you end up taking out a loan, make sure you shop around because interest rates and related fees and charges for car loans vary a lot.
3. Make saving money for a car a priority.
Keep in mind that while you’re saving money for a car, you need to also make sure to budget for your other expenses as well such as your mortgage and other monthly bills.
Once you figure out how much you’ll need to buy your car, the next step is to start saving money.
If you need to work extra to earn more money on the side, know that there are multiple ways to make extra money. From completing surveys to watching online videos. These extra cash should go towards car savings goal.
4. Set up a high interest savings account.
What is the best account to save for a car?
Instead of putting your money under your mattress, think about opening up an online high yield savings account. They offer better interest rate which compounds so you can interest on the interest and your savings keep growing.
5. Make your savings automatic.
One of the best ways to save money for a car is to make it automatic. If you have a job, transfer some of your paycheck directly into your savings account.
You can do it yourself or ask your employer to do it for you. Saving your money automatically allows you to ‘set it and forget it,’ so your savings will grow each time you get paid.
6. Save more and more.
Think about ways to cut back on necessary items like gym membership, clothes, subscription magazine, etc…
Track your everyday expenses , so you know what you’re spending your money on. The Personal Capital free and easy to use app will help you to keep track of where your money is going.
Before you buy a car, take time to learn how to save money for car by doing the following:
- Check your credit score before you buy your care. That can save you thousands of dollars in interest. You can get a free credit score and credit report either at CreditSesame or Credit Karma.
- Save as much money as you can to buy your car, and make savings a priority. Remember the more money you put down, the less you have to pay.
- If you decide you’re gonna take a loan to buy a car, remember to shop around for the best deal. So take time to compare interest rates at LendingTree. Remember even a small difference in the interest rate can make a huge difference on how much you have to pay.
Related: How to Save 100k
Work with the Right Financial Advisor
You can talk to a financial advisor who can review your finances and help you save 100k (whether you need it to pay off debt, to invest, to buy a house, or plan for retirement, saving, etc). Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.