Buying a new car is not your typical everyday purchase because it requires a handsome sum of money. Even the cheapest hatchback today, the 2019 Mitsubishi Mirage, will cost you almost $14,000.
If you‘re not rolling in dough but want (or need) to own a car, then saving up some money for it first is a sound financial move. Here are some tips to help you reach your goal faster.
Find out which car type you want
The first step to saving for a new car is to determine what car you want to purchase. By knowing exactly the type of car you need, including the make and model, you’ll be able to scout dealership prices and have a good idea of how much money the car will cost. You can either save for the entire purchase price of the vehicle or 20% of it if you plan to take out a loan.
Account for other car costs
Aside from the car’s price tag, you also need to save up for the other expenses that come with owning a vehicle. These include stamp duty, vehicle registration, insurance, driving license, and petrol. Add these costs to the car price and you’ll determine roughly how much you need to save up for a new car.
Determine a budget and follow it
Once you know what car you’d like to own and how much it will cost roughly, then it’s time to set a budget and stick to it. Review your income and expenses to determine how much you need to save. Once you’ve set a budget, make sure not to break it because saving could take 1 to 3 years until you have the complete amount for your new car.
Create a savings schedule
Life can get pretty busy and yes, it’s possible to forget to set aside money for your new car no matter how badly you want it. But if you want to get your new car as soon as possible, saving should become a habit. We recommend creating a schedule.
Decide whether you want to save weekly, fortnightly, or monthly and be faithful to it. To make sure that you are following your savings schedule, you can set up reminders on your phone or create events on your calendar.
Set your purchase date
Nothing is more motivating than a deadline. When you start saving for a new car, set a target date for your purchase. A deadline that will force you to stick with your saving schedule. Without a target date of purchase, you’ll find it easier to spend your money on something else instead of depositing on your savings account.
Based on your computed budget, set a realistic deadline for saving the total car cost. Then, pick your purchase date, which is ideally towards the end of the month or financial year when special deals and discounts are given by the dealerships.
Cut your spending
It goes without saying that when saving up for a new car, cut your spending elsewhere. Redirecting your cash flow towards your car goals will help you save more money and much faster, too. It’s completely up to you to decide where to take the budget cuts but be honest about what’s really eating into your savings and nip that problem in the bud.
For some people, eating out less and cooking more at home is a great approach. Also, don’t shop on impulse. Buy your groceries and other personal items when they’re on sale and choose the cheaper brands. And if you don’t need an item, then don’t buy it. Control your urge to spend and focus on saving instead.
Find other revenue sources
To save up for a new car even faster, you can augment your savings by earning more money. Find another source of income. If you can play an instrument, get paid by offering lessons. You can also work part-time in shops and restaurants. What’s more, you can also sell your old stuff on eBay or have a garage sale.
Whatever new job you choose, the important thing is that you have another stream of income that will make your savings bigger.
Save with interest
When saving up for a car, you’d want to grow your money in every way possible. Start with saving your money with interest. If you don’t have a savings account yet, then open one now! Regularly deposit money into it (follow your savings schedule) and refrain from withdrawing to gain as much interest as you can.
When your savings become large enough, you can also open a term deposit, which has a higher interest rate and will earn you a larger annual interest income.
Keep that spare change
If you are really dedicated to saving up for a new car, you’ll try to save every amount of money that you can. That includes your loose change! Put those $1 and 50 cents in a jar or your old piggy bank and once filled, you can transfer the lot to your savings account.
Use budget apps
Plenty of mobile apps today will help you stay committed to your goal of saving up like Stash, a great app for beginners; Trim, the application to help cut your spending; and Acorns, an awesome budget and investment app.
These are all available in the Appstore and Google Play and will suggest the best saving schedule based on your finances. Download these apps on your phone and you’ll find it easier to save for anything, especially for a brand new car.
Follow these tips and you’ll save more than what you’re aiming for.
Once ready to purchase your new car, don’t forget to shop around and find the dealership that offers the best deal. If you’re planning to take out a car loan, then it’s best to get pre-approved finance first before heading to the dealerships so you’ll have more bargaining power to ask for a lower price.
Aussie Car Loans is the best place to go for car loans. We offer competitive rates and flexible loan terms for new or used cars. Call us today on 1300 889 669 or apply online and get pre-approved financing for your new car.