Buying a car is expensive and you need to save money before you make the decision to do so. Irrespective of whether you choose to buy a new or old car, you need to get your finances in order.
Know the Price of Car You Wish to Buy
Research and compare different car brands and models, so that you know how much you need to save. When you know the price range of the car you want to buy, you can calculate the down payment.
One of the important things you need to know is that when you make a higher down payment, you can negotiate a lower interest rate with the dealers. Compare prices and lending terms so that you know how much you need to save.
How Much You Need to Save?
The general rule is that you need to save 20% of your salary to buy a new car and 10% for a used one. Apart from the cost of the car, you need to save for insurance and tax.
Be realistic in your savings. Don’t set too high a target. If you set too high a target, you will not be able to maintain the savings and may eventually give up. Balance your expenditure in such a way that you are able to save each month.
Open a Savings Account
Now that you know how much you need to save to buy a car, it is best to open a savings account. Opening a separate savings account is advisable so that you don’t use the money for any other purpose.
Make regular monthly contributions to the savings account. You will be able to save a good amount of money within a few years. This can be used to make a down payment and buy your dream car.