When it comes to transportation, there are plenty of affordable options, such as walking, public transportation, or biking. However, this is not realistic or even desirable for many, and at some point, you might be finding yourself needing to save up for a new vehicle. The good news is that there are several ways of making this process more affordable.
Cut Monthly Expenses to Save for a Down Payment
When you go to a dealership to get a vehicle, you will likely need to make a down payment. That means you put some of the money upfront, and the rest will be covered through a loan. To pay off the loan, you will usually make monthly payments. It’s a good idea to put down at least 20 percent of the total purchase price. It’s often tempting to get the vehicle before having enough down payment, but try to avoid this unless absolutely necessary. The more funds you can put down now, the less you will have to pay on the loan.
Consider cutting your monthly expenses so you have enough to put toward the vehicle. For example, if you have a life insurance policy, you might consider selling that so you can get a lump sum to put toward the vehicle. If you are thinking about selling your life insurance policy through a life settlement, you can review a guide that explains the entire process.
Look at Your Existing Budget
The nicest, newest cars aren’t cheap, especially since the demand has increased. However, that doesn’t mean you should spend all your money on fancy, extra features, such as a sunroof or wood paneling inside. Determining your budget is easily one of the most essential things to do when buying a new car. Come up with a budget and make sure you stick to it. Consider how much you can afford on a car payment each month. It’s best to avoid spending any more than about a fifth of your monthly income on car expenses.
Decide What You Want and Need
If you love the idea of luxury features, such as a leather interior, it can be tempting to get the latest and greatest features. However, they can be expensive, so try to prioritize what you really need. For example, perhaps you want a car with certain safety features, and you might feel this is more important than what the interior looks like.
The good news is that if you budget accordingly, you can likely get what you need. Still, you might not be able to pay for everything you want. There will be some additional expenses you will need to consider as well. The sticker price is just one of the costs of purchasing a vehicle, but there is also insurance, parking fees, maintenance, and gas to consider. These can all add up quickly, and you might be surprised at the costs if you haven’t had a car before. Look for something that gets relatively good mileage since it will save money over the long-term. That’s especially true if you will be commuting long distances or using your car to go on a vacation.