How to Save For New Car With 500 Per Month?
Singer Peter Gabriel once sang in the song “Mercy Street “ that all of the cars you see in the street were once a dream in someone’s mind. The cars that we drive usually live in our minds for a long time before we buy them. Buying a car in the future is motivation to save for a new car now.
Trying to save for a new car is easier said than done in this economy. If you can only save $500 monthly, here are 10 ways to save money for your next ride.
1. Choose the Make and Model You Want
Visit local car dealerships in person and do online research to choose your desired vehicle. It will be easier to save for a new car if you know which vehicle you want. Are you looking for a subcompact, compact, sedan, or SUV? Make a list of desired vehicles with your top choices at the top. You can then price-check and compare prices to calculate how long it will take to save for a new car.
2. Decide Which Features are Unnecessary
Once you choose your top choices for a vehicle, decide which optional features won’t be needed. Car dealerships will try to get you to pay extra for unnecessary or useless features. Do you need a night vision screen display or social media integration for your console? Window shop at car dealerships, check out your desired vehicle and ask about available features. Then, you can decide which features you can do without to streamline your budget.
3. Open a Savings Account to Help Save For a New Car
Open a savings account to help you save for a new car. If you have an online bank account then you can do it yourself. Are your paychecks directly deposited into your bank account? Then you can choose how much of your paycheck can be deposited into your savings account for a new car. Doing this can be a great motivation to stay disciplined.
4. Get Financing
An auto loan could potentially help you save for a new car. Depending on your credit score and history, you might qualify for an auto loan that can get you a new car with less money upfront. Compare banks and car dealership offers to see if you pre-qualify for an offer that suits you. The current interest rate for most new cars is about 7% and almost 12% for used cars.
5. Consider Leasing a Car
Leasing is signing a contract to drive a vehicle for anywhere between 24 and 48 months. As long as you take care of the vehicle you can then extend the lease as necessary. Depending on your credit and the make and model of the vehicle, you might pay anywhere between $2,000 to under $4,000 as a down payment and pay less than $500 monthly to lease a car. You won’t outright own the car, but leasing is a quicker way to save for a new car than trying to buy a new car to own.
6. Consider Getting a Used Car
The average price of a new car is $49,000 while the average price of a used car is $31,500. The cold reality of math is that it can take you about 8 or 9 years to save for a new car if you squirrel away $500 monthly. Americans are also more likely to buy a used car than a new one. Consider all of your options; think of a used car as your starter car before getting a new one later.
7. Live Below Your Means
If you want to specifically save for a new car, and not a used one, then you should adjust your tactics, especially in this economy. Look over your household budget, and if you don’t have one, make one. Learn to consistently live below your means. Look over your budget and eliminate all unnecessary expenses.
8. Work Extra Gigs
Anyone can find work in the online gig economy. Leverage any useful skills you have in finding online work. Whether you’re an artist, web designer, writer, or marketer, there is always work to be found online. It will be easier to save for a new car when you have multiple income streams instead of one.
9. Sell All Valuable Personal Items
Go through your home and identify and itemize every item of value that you can sell. If you want to save for a new car, then you have to make sacrifices. You could start by having a local yard sale to move your items. Then, try eBay, FB Marketplace, and other social media sites to sell your items.
10. Go For a Test Drive to Stay Motivated
Go to a car dealership to test drive some cars. It can be hard to stay disciplined when you can only save $500 monthly. Even if you can’t afford to buy it yet, going on a test drive is a good way to stay motivated. Find ways to stay motivated and don’t give up.
How to Save For a New Car
Stay disciplined when saving money for a new car. Try to consult with a finance expert if you can. Always update your budget when your finances change. Additionally, remember that you need to live below your means until you reach your goal.
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Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.