How to Save Money on Your Next Car
You’ve decided it’s time to purchase a new car, but you have no idea where to start. Buying a new car can be both an exciting and frustrating process, but with helpful guidance you can make sure that you and your savings are fully prepared for this next big purchase. The best way to get started is to do your research. The internet offers a variety of tools to help you choose the best car to purchase. Here are some additional factors to consider when looking for that sweet new ride.
Calculate Your Down Payment
The first step in buying a new car is figuring out what you can afford. How much are you willing to spend? It’s important to do your research on different makes and models to see which best fits your goal budget. From there you will determine how much you would like spend for your down payment. To determine how much is necessary to put down, you will need to know the type and cost of the vehicle you are purchasing. Aim to put about 20% down on newer vehicles, and 10% down on used vehicles. Making a higher down payment can also earn you a lower interest rate and more affordable monthly payments.
Budget for Expenses
It’s important to find a car that not only fits your personal needs, but also that the monthly payments fit into your overall budget. Keep in mind that if you don’t have the funds available to pay for your new car in full, you will be adding a car payment as well as a few other expenses in to your budget. Consider a 50/30/20 budget where 50% of your monthly income is dedicated to needs, 30% to your wants, and 20% to savings or repaying debt. You will need to decide whether to factor your vehicle savings into your “needs” or your “wants”. Also keep in mind that car insurance will become a part of your budget as well. It’s important to compare car insurance rates from multiple companies, or consider bundling with homeowners or renters insurance to save you the most money.
Limit Unnecessary Spending
Buying a new car is not cheap, so consider cutting back on other areas of spending in order to save the most money that you can. You can also look into ways to reduce your current expenses such as cable or groceries. Switch to a cheaper and equally reliable cable company or spend less on groceries to save more. You can then redirect the excess money to your vehicle savings.
Set Up a Savings Account
If you don’t already have a savings account open, we recommend you start one as soon as possible. Some savings accounts even earn you interest on your balance. If you already have a savings account, we recommend opening a separate one specifically for the purchase of a new car. This will help you resist the temptation to use that money for any other purposes. Consider looking into high interest accounts or certificates if purchasing a car is a long term goal for you. Make regular contributions to your savings, or even have automated transfers set up to deduct a certain amount from your checking account periodically. At Robin Financial, we offer a variety of savings and certificate accounts to help your savings grow even more.
Selling or Trading Your Current Car
If you’re planning to replace a current vehicle that you own, consider selling it or trading it in to help cover some of the cost of your new car. Selling your old vehicle yourself could make you more money, but it may cost you a lot of time. You can also look into appraisal tools to help estimate your car’s value. We have a new feature on our website that allows you to find your car’s value. Knowing your car’s value lets you get an idea of how much money you’ll be able to add to your savings fund after you sell your car. Sometimes if a car you owned was totaled, insurance companies may issue a reimbursement check that could cover some or all of the cost of a new car.
Finding the Right Vehicle
You’ve saved all of the money you can, estimated your new budget to include a monthly car payment, and now it’s time to buy your new car! An important detail to remember is to find a car that fits your needs as well as your lifestyle. If you travel a lot, you may want to look into a car with the best gas mileage. Is your family growing? Consider shopping for a car with the optimal amount of space. Also, consider what you like and don’t like about your current car. You want to avoid any cars that have similar features that you didn’t like with your last vehicle. Successfully buying a car comes down to knowledge, preparation, and knowing when it’s the right time. Take the time to fully prepare yourself and your budget, so that when the timing is right, you can get the best car for your needs!
Buying a car is an important purchase. Let us walk you through the process and show you how you could save hundreds or even thousands of dollars on your next vehicle purchase. With great rates, no hidden fees, and convenient payment options, our Auto Loans make buying a car easy and affordable. Our Auto Loan Calculators help you determine how much you can afford. If you’re ready to start the car buying process, apply for an auto loan online, over the phone, or request an appointment at one of our branches.
At Robins Financial Credit Union, our mission is to enhance the financial well-being of our members and community. We honor this commitment by providing educational content to help you make the most of your finances. Read our other blog articles to help you gain the financial knowledge you need to succeed.