You’ve got your sights set on buying a car in the future, be it used or brand new. What’s more is that you need a car sooner rather than later, maybe to drive to work, get around town, or another related reason. That’s why you don’t have the luxury of saving up to buy your next car without financing. To help, here are some tips on saving up a large down payment for your new wheels.
Determine What Kind of Car Payment You Want
One of the first things to do is sit down and look at your current finances and income. What debt is almost paid off? What debt and income do you anticipate in the future? Use the answers to these questions to determine what kind of car payment you can easily take on. As you’re determining that amount, be sure you calculate the cost of registration, insurance, gas, and future maintenance.
Cut Out All Unnecessary Spending
In the coming months, do everything you can to eliminate unnecessary spending. Every time you go to pull out cash, your debit card, or your credit card, ask yourself if you really need whatever you’re about to purchase. Even if you only buy one or two cups of coffee a week, you may be surprised to see how much money you can save up over a month or two by putting that money into a savings account for your down payment and making coffee at home. Besides asking what’s the best way to get an auto loan, you should also ask what’s the best way to keep all your spending to a minimum.
Set up Automatic Deposits
If you have a hard time remembering or prioritizing saving money for a down payment, make good use of automatic deposits. Set up deposits to coincide with payday, which can make it easier to avoid accidentally overdrawing your account. Something else you can do to make saving up a hefty down payment easier is putting those automatic deposits in an account opened with a separate bank. When you don’t see the money in your usual checking or savings account when you open your banking app, it’s that much easier for you to resist spending that money.
Decide When You Need the Car
If you can still drive your current car, take it to a mechanic to see if you can get a free inspection to determine how long the car is likely to last you. This information lets you know how long you’ve got to build up your down payment. While you’re at it, decide how you’re going to get around if something goes wrong that the mechanic didn’t anticipate, or if there’s just no telling how long your car is likely to last. It’s always best to plan for the worst before it arrives rather than let it make a surprise visit at your doorstep…and your bank account. If you need a new car ASAP, you may be able to trade in your current vehicle to help buy new wheels.
Consider a Side Hustle
Maybe every dollar of your current income is already tied up in your current financial obligations. It’s easier than ever to pick up a side hustle and make some extra cash. Just do what you can to make sure that side hustle doesn’t involve using your car very much, as that is likely to put more wear and tear on your vehicle, which can lead to an unnecessary breakdown or repair. Look into mowing lawns in your neighborhood, dog/house/babysitting, or being an in-store shopper for a grocery delivery app.
Keep these tips in mind to help build your down payment and decrease your loan amount. Your future self is sure to thank you for your financial diligence.