5 Ways To Save Money For A Car (Automated)
Saving up to buy a car these days is at the same time a whole lot easier than it ever used to be in the past and much, much more challenging.
- Good news: There are an almost infinite amount of options out there to help you make a little more money, save a little more money, and better budget for your next car purchase (regardless of whether or not you’re looking to buy a new or used).
- Bad news: The car market has gone absolutely crazy in just the last few years. Prices have skyrocketed (and held), supply has slowed to a trickle, and even clunkers are difficult to pick up at the kinds of prices you could have reliably paid two or three years ago.
That’s where this guide comes into play, though.
Sound good? Let’s do this!
How To Save Money For A Car
Buying a car is a major financial undertaking, so it’s important to start saving early. With the right strategies in place, anyone can learn how to save money for their dream car.
Armed with the inside information we highlight below you are going to find it to be a whole lot easier to save money for a car and get behind the wheel of the vehicle you want without spending a small fortune.
Start By Setting a Budget, Knowing How Much Money Do You Need And When?
The very first thing you need to do when gearing up to save money for your next car is to think about exactly how much money you’re going to need to begin with.
Believe it or not, this is a step that a lot of people hoping to save money for a car end up skipping completely – and it’s a big part of why they often end up spending 25% (or more) extra on a vehicle purchase than they would have liked to.
By starting at the start and really lasering in on the exact dollar amount of money you need to buy your next vehicle – and then making that your concrete goal as you save – you eliminate a lot of guesswork, you eliminate a lot of frustration, and you have a firm milestone that you can use to track your progress towards it.
Finance or Pay Cash Outright?
When starting out, though, you need to figure out whether or not you are going to be financing your vehicle or if you are going to be paying cash outright.
Sometimes payments are the way to go – particularly if you want a newer vehicle and especially if you are thinking about a lease program.
Knowing exactly how much cash you need to own your vehicle outright, though, can give you a lot of extra financial freedom you wouldn’t have had to make a monthly payment for the next few years.
Either way, it’s important to know if you are saving a couple of thousand dollars for a down payment (and maybe a couple of months’ worth of car payments in reserve) or if you’re going to be saving $10,000 or more to buy a car with cash.
When Do You Want to Buy the Car?
Another big piece of the puzzle you want to square away as early in your saving journey as possible is when you want to actually buy the car itself.
If you set a goal to put aside $10,000 for a car, for example, but you never put a firm deadline for when you have to hit that amount you’ll never know if saving a dollar a day for 10,000 days or a hundred dollars a week will get you where you’re trying to go.
Have a firm end date in mind.
Maybe that’s six months down the line. Maybe it’s a year or more. Just be sure that you have a concrete timeline you’re working with, as that’s going to let you know how much money you have to save every month, every week, and every day to hit your goal on schedule.
Automate Your Savings as Much as Possible
One of the smartest moves you can make when trying to save up for a vehicle these days is to automate the process just as much as you possibly can.
Almost every big bank (and even most small banks and credit unions these days) has saving accounts with automatic “goal saving” programs that let you save board big purchases without having to think about it.
The way these automated systems work is really pretty elegant.
- First, you log into your online banking system or your mobile app and set up your goal amount.
- Then, you punch in the timeline that you want to have this money saved by, where you want the savings to come from, and then schedule how the savings are going to be deposited into this goal account from here on out.
- Lastly, start saving and get driving.
All that’s left to do is sit back, relax, and let the automated system handle the heavy lifting for you!
The system will pull money from your account and put it into this special goal account automatically, triggered by deposits or scheduled to happen every month, every week, or even every day – whatever you want to do.
It’s as close to a set-it-and-forget-it solution for saving for your vehicle as you can get.
Pay Your Car Fund First
If you don’t want to go the automated way, though, consider making it a priority to “pay” your car fund first from every chunk of money you receive.
We are talking about putting money directly into your car savings account every time you get a paycheck, every time you get money for your birthday, every time a friend pays the money back that you lent them, every time you hit when betting on your favorite football team.
If you get money, take a set percentage of that money (10% works as a great baseline) and stuff it directly into your car savings account.
Make it a priority, be consistent, and you’ll end up with plenty of dough to buy your next vehicle faster than you would have thought possible.
Get A Side Hustle
Anyone that’s serious about money will tell you straight out of the gate that the fastest way to save for a big purchase is not to save at all, but instead to bump up your regular income.
That’s not the worst advice in the world, but it isn’t always that easy.
The right side hustle may be able to fast-track your new car journey quicker than you ever thought possible, especially if you are able to leverage any particularly valuable skills, abilities, tools, or expertise that you have already developed.
If you don’t have any hard marketable skills or side hustles brewing already, though, you might want to consider jumping feetfirst into the “gig economy”.
- Consider sliding behind the wheel of your current vehicle and doing a little driving for Uber.
- Try working for the folks at DoorDash or Grub Hub.
- Jump on popular freelancing platforms such as UpWork or Fiverr and see if there are some freelance gigs you could knock out to make a little extra cash.
If you want to increase your income further, you may consider getting a passive income, in fact, we’ve recently published some great articles on passive income that you can consider.
- Easy ways to earn passive income as a beginner.
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Anything that bumps up your regular income will help you save more money for your car purchase.
Consider Alternative Lending Options
No, I am not telling you to take on bad debts that can damage your finance, but if you really need to buy a car, it might not be a bad idea to consider alternative lending options.
The peer-to-peer (P2P) lending industry has boomed over the last decade or so, with more and more people with money willing to lend it out to others at a fraction of what it would have cost working with traditional banks or credit unions.
You might be surprised at the kinds of deals you can dig out in the P2P lending world, loans that get you behind the wheel of your vehicle faster without you having to spend a small fortune in interest.
Some car dealerships or P2P platforms offer a low-interest loan which can help you thousands of dollars if you choose to borrow from a traditional financial institute.
Talk to the car dealership, some of them even offer to provide 0% interest car loans, which can be beneficial for your car purchase.
Nonetheless, always look into the fine print before you decided on any lending options, as the wise man said:
“The devil is in the details.”
Tips for Buying a Car to Keep in Mind
Always Shop Around
When you are buying a car, always do your research, shop around and compare prices from car dealerships. Doing so helps you find the best deal for your money and gets you one step closer to driving away in a new car.
Shopping around for a car also involves considering all of your financing options and researching the features of different makes and models.
Use the Web
The web has an array of resources that could potentially provide real-time insights into the car prices in the market.
By leveraging the power of the internet, consumers are able to quickly and efficiently find advantageous deals on vehicles, insurance coverage, and other associated expenses that may be necessary for the successful acquisition of a car.
Opt for Monthly Payment
Some car dealerships have 0% interest rate car loans available, which essentially let you use the car while you pay 0% interest rates on the monthly car payment.
With a 0% interest rate monthly payment, you can have a better cash flow for your money to be utilized for other uses, such as investing in a dividend-yielding stock, which helps you earn a percentage each month that can be used to pay for your only car loan.
Why Save Money For A Car
Putting aside funds can help shield the individual from the potential financial strain of unanticipated expenses associated with owning and operating a vehicle, like repairs or increased gas prices.
Additionally, when individuals are able to set aside resources for the purchase of a vehicle, they have increased bargaining power when negotiating.
Are You Ready to Buy a Car?
So there you have it, a couple of different ways you can save up the money for your next car purchase without wanting to tear your hair right out of your head.
Before we part, though, we want to leave you with a couple of tips to find the best price and the best vehicle when you are on the hunt for a new car.
- For starters, get crystal clear on the kind of vehicle you want – and we don’t just mean a pickup truck, a sedan, or a convertible. We are talking about getting concrete about the exact make and model, the exact year, and the exact condition (as well as any special features you’re looking for) as you possibly can. That’ll speed up your search quite a bit.
- Secondly, take advantage of the internet to find great deals in your local area, and beyond that, you wouldn’t have found driving down to the handful of car dealerships you likely have in your community.
- Finally, don’t be afraid to walk from a deal that isn’t exactly what you are looking for.
Way too many people get roped into buying a car close to what they wanted with a payment close to what they could afford and it spirals them into a real nightmare kind of scenario. While some experts will recommend the car be less than 10% of your annual income, as a general guideline, your car should not cost more than 25% of your annual income.
Save up for the car you want– the exact car you want – with the tips we highlighted above and then make sure that’s the one you sign on the dotted line for.
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