For most people, a home isn't their first big expenditure. It's usually a car. While they may be as different as chalk and cheese in price, the path to ensuring you have the financial ability to afford a vehicle is just as similar to buying your first home. In this article, we share some ideas to help you save up for your first car.
1.Determine Your Needs
It might sound like a boring first step, but with the variety of makes and models out there, it's easy to lose sight of what you actually need. From the distance you'll have to cover or the number of people you may be ferrying, it's important to determine your need for a car. This will help you shortlist the makes and models that fit your requirements as well as determine the amount you need to save up to buy it.
2. Work Out Your Budget
Most prospective and new car owners tend to trip up here. They pay close attention to the initial downpayment or deposit as well as the monthly payments for their car loan. When they only factor these into the overall cost, it's likely they'll say "Yes!" to that car they've been eyeing in the showroom.
However, the cost of car ownership extends beyond the downpayment or deposit and the monthly loan payments. Other expenses include insurance, vehicle tax, petrol as well as periodic servicing and maintenance. Unless you intend to keep the car in the garage, you'll need to budget for these expenses. To this end, it's sensible to create a separate account for this purpose.
3. Cut Out The Frills
It's advisable to be single-minded in your savings plan for a car. With a need and budget in mind, it's easy to have that focus. But it comes at a 'price'. You'll have to cut back on the frills, for example, night outs or unplanned online purchases. Until you've accumulated the reserves you need to buy and maintain a car (at least for a year), being frugal and prudent is essential.
4. Work The Hours
Every dollar you earn takes you closer to your dream car. Whether in the form of savings, as discussed above, overtime pay or a side hustle, our advice is to create as many channels as possible to build your financial reserves. To err on the 'excessive' side in this regard isn't a bad thing. The extras not only widen your choices but give you the peace of mind in the initial one or two years after buying the car.
5. Create a 'Car' Account
If a car is important to you, it makes sense to ensure you're able to buy and maintain it. From a financial perspective, it's therefore sensible to open a separate account to this end. Given that you probably have other financial obligations, the separate account ensures you'll always have the funds to keep the engine running. As much as possible, avoid having to dip into the different accounts you may have to meet your other financial obligations and lifestyle.
6. Set Up A Standing Order
With a standing order, you're less likely to topping your car account. Having this discipline keeps the anxieties away. At the same time, it'll ensure you stick to your budget too. Remember, owning a car is an on-going financial commitment. It isn't a one-time financial undertaking.
7. Shop For The Right Car Loan
It's a very competitive car loan market. Hence, if you put in the effort and time, you'll be able to find the car loan that fits the size of your wallet. Do not let the enthusiasm of owning a car get in the way of securing the right car loan. Through Approved Car Loans, we can help you find the best car loan for your personal circumstances. Begin an application in 30 seconds or call us 07 3340 6700 to get started.
End-of-financial-year-deals can be a good time to get your first car. It's the time of the year when car dealers try to offload the previous year's models to make way for new ones. If you achieved the targetted amount of savings around this time, you'll be spoilt for choice of car makes and models.
So, aside from having a budget in mind, it's also important to set a purchase date. Whether it's end-of-financial-year or the start of a calendar year is not important. What's important is having a timeline and tracking your progress.
The excitement of getting your first car can be intoxicating. It can distract you from the financial realities. Do not overlook or sidestep them. Call us to learn more about the steps discussed above.