7 Ways to Save Money for a Car Quickly
Sometimes a new car purchase is inevitable, but saving enough money quickly is a huge challenge. Lucky for you, there are multiple ways to not only save money quickly but to make money quickly. There are also useful methods that you can use while searching for your next ride.
To save money for a car quickly, first, calculate the down payment you wish to make. You’ll also need to set up a savings account and make sure that you are budgeting accordingly. These are just a few of the most important steps in saving for a car.
Here we will discuss the seven ways to save money for a car quickly; some you may have already thought of while others you may not have. Keep reading as we get into the ways that you can get that car into your driveway.
How Much Money Should I Save to Buy a Car?
Determining how much to save when you are in the market for a new car can depend on a couple of different things. However, there is a general rule when you want to buy a car: try to put down at least 20% of the cost of the car and try not to finance the vehicle for more than four years. If you are financing a car, try to keep your monthly car payment below 10% of your monthly income, including interest and insurance.
When saving to purchase a car, you want to make sure that your monthly payments never put you in a place of discomfort or financial uncertainty.
So, this question can pertain to whether or not you want to buy or finance the car. Overall, let’s say we are talking about financing. The general rule of thumb would be to think 10% for used cars and 20% for something new.
How Long Does It Take to Save Up For a Car?
How long it will take you to save up for a car is completely circumstantial. When trying to figure out how long it will take you to save up for a new vehicle, ask yourself what type of car you want and the cost of it or at least what your total spending budget for a new car could be. Then decide if you want to purchase the car outright or if you want to finance it and pay it off with monthly payments.
Then determine how much money you can comfortably spare every month so that you can put away a certain amount regularly. Once you have the answers to these questions, you will determine how long it will take you to save up for your next car.
For example, if you are looking at a used car for $14,000 and you make $50,000 a year, which is a little less than $4200 a month, and your rent is $1500 a month, which leaves you with under $2700, you may be able to afford setting aside $1200 a month for your purchase. You may even be able to set aside more, but this depends on what you are comfortable doing.
With this particular plan, you would have more than enough to buy your car outright in less than one year, and if you are planning to finance, it will take significantly less time to save up for the down payment. You want to make sure that you still have enough money left over to cover bills, groceries, gas, and emergency expenses.
The main thing to remember about saving up for a car is that whatever you set aside every month will only last until you have reached the amount you were trying to save.
So keep in mind that even if you take out $1200 a month to save, you will only be doing that for a certain period of time and not until the end of time, so although it may seem like a lot at once, it’s only temporary, and at the end of the journey you will have that brand new car that you wanted or at least a car that’s brand new to you.
7 Ways to Save Money for a Car Quickly
To help you save money for a car quickly, we’ve created a seven-step process. Up next, we’ll share those seven steps.
Start a Side Hustle
Start a Side HustleEveryone could use more money every month, and a good way to do that is to start a side hustle. There is no better inspiration to starting an extra streamline of cash than knowing that there is something that you want to be able to afford.
Work for a drive share company, work for a delivery company, take to Pinterest or turn a hobby into something that people pay for. There are multiple ways to make income in this day in age, even with just online methods.
Having a side hustle is a good way to increase your monthly earnings, allowing you to save for your car more quickly than you originally anticipated.
Pay In Cash and Forget Loan Options
Don’t get sucked into wanting your new car right here and now and fall into the trap of applying for unintended loan offers. Instead, pay in full if you can see so that you don’t fall into the situation where you owe more than what you have borrowed.
Although loans seem like a great option to get what you want as soon as you want it, you have to remember that you will also be paying interest fees, so overall, you’ll be paying more solely because you borrowed a lump sum of cash. Also, remember that many dealerships offer discounts to customers willing to pay in cash.
Stay Patient and Don’t Be Too Hasty
A common mistake that buyers often make is getting too hasty too early. Instead, be patient and know that you will often find the best deals when not looking for them. We simply mean not making decisions too quickly, especially if you are not sure of some answers.
Do your research ahead of time, ask questions, and don’t be afraid to step out of the box during your search. For example, if you think that you may get a better price if you look for a car out of state, then do so, and the same could apply to any other type of situation.
Put Your Old Car to Good Use
Use your old car for the trade-in credit. If you already have a car in your name, don’t let it go to waste. Take it down to the dealership where you want to purchase a new car or even get an online quote. There is money in any old car. That is money that you could have automatically put toward purchasing the car you are looking at getting. Never forget the value of a potential trade-in.
Compare Prices
It’s like window shopping. Whether you’re shopping online or on different car lots, it never hurts to compare the prices that you see. This is how you can ensure that you get the best price on the models you’re looking for and within your area.
Doing this will give you the best idea of what to expect to find within the price range that you have outlined for yourself. In addition, this will help you to figure out if you are shopping within a healthy budget range or if you have some adjusting to do.
Weigh The Pros and Cons of Used and New
Although the idea of a brand spanking new car is appealing, it’s important to note that as soon as a new car sets a tire off of the lot, it begins to depreciate. However, you can still get a fairly new car that has more than 0 miles on it, and you will often be able to utilize its features at a discounted price.
Remember that by purchasing used, you allow the first owner to take that massive depreciation hit. The largest cost of owning a car is that depreciation aspect, so if you take yourself out of that part of the equation, you will get more value on their return than a used car can offer.
Negotiate Or Learn How to Negotiate
This mainly applies to those of you that are going down to a car dealership. The art of negotiation can be a fabulous one when it works in your favor. Often when cars are priced to sell, the dealer may be open to negotiating on the price, especially if you are prepared to provide a competitive down payment.
Keep your options open and be willing to fight for the price that you want or that you think is fair because if you’re willing to negotiate, the dealer may be just as willing to haggle as well.
What's a Good Type of Account to Put My Money Into While Saving For a Car?
Often we can be tempted to spend the money that we put into our savings account for something in particular. So, for example, if you are saving money to buy a car, it’s not suggested to look at the total amount of money you would need sitting within your checking account because it could easily be spent.
Think of utilizing your savings account or open a separate saving account specifically meant for the purchase. Then, open that second savings account with a bank you already use or even look at a money market mutual fund.
A money market fund is another type of mutual fund that specifically invests only in investments considered to be completely safe. With either option, you lessen the opportunity for the risk of losing your money, and you have the potential to earn interest on those savings as well.
Outro
All of the steps that you have decided to take to be able to purchase your next car will determine how quickly you can make this purchase is what your spending budget will be.
A few things to keep in mind during your search is to make sure that you streamline your search toward used vehicles for reasons that were mentioned above, never be afraid to negotiate, use that old car of yours for trade-in credit and make sure that you check out more than one source for buying.
If you are thinking of financing, make sure to compare different finance programs and always read the fine print on any loan applications if that is the route you intend to use.
There are multiple ways to save for your next vehicle quickly, and the ones mentioned above are just a few of the top tactics that many people will turn into. Whatever reason you are saving to buy a new vehicle, quickly know that it is very doable in can often be a fun and rewarding experience, especially for first-time car buyers.
