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Keeping Your Finances In Check When Saving For A Car
One of life’s big purchases and often a very exciting one, buying a car can be that much more rewarding when you’ve worked hard and saved to buy it outright rather than having to finance your purchase.
Car loans are very common and millions of people out there have them, but before you decide on going down that road think carefully. Is it really a good idea to finance the purchase of something with one of the highest depreciating values? How is your credit, do you need to look into a credit restoration service first? Unless you are a mechanic or someone who has the ability to improve the value of the vehicle by way of improvements – not just superficial improvements either, then your best bet is to save first, then buy.
Before your savings for a car can have any real direction you need to have an amount in mind that you are willing to spend. First you need to know what you want to spend – usually helped by a little market research into the current value of new/used cars that you are interested in. Then you need to know what your limit is, if you find the ‘perfect’ car what is the maximum you’ll pay. Once you’ve decided on this ensure it doesn’t start creeping up when you start shopping around – do the research first.
Consider the running and maintenance costs of your chosen car – fuel, registration, insurances etc. To avoid a shock to your income when you’ve purchased your car, try to include the first 6months running into your savings. Even if you are able to save for one portion of those maintenance costs such as insurance it will ease your money worries later.
Make or refresh your budget, how much can you afford to put away into savings for your car? Decide on a realistic amount and stick to it. Open a savings account that won’t let you access the funds until your goal you’ve decided on – the maximum you’re willing to pay plus some maintenance costs – has been reached. Consider savings options the bank might be able to offer such as an online savings account bonus or savings incentives.
Create a regular automatic payment if possible into your savings account. Keep your car savings separate from any other savings. Remember the end result; savings can be hard at times so maybe keeping a picture of the car you’re hoping to have posted somewhere you’ll see everyday will give you the motivation you need to save for it.