- Date : 20/06/2019
- Read: 5 mins
Are you planning to buy your first car? Here are seven ways to effortlessly save for your first automobile
For all you ladies out there, owning your first car is one of life’s greatest milestones. However, you need to save sufficiently to fulfill this aspiration. With fluctuating market costs, consider these ways to save effortlessly for your very first car.
1. Select the car you wish to purchase
Determining the type of car you wish to purchase will help zero in on a figure that you need to save. To reach this decision, think about why you want the car at all:
- If you need to drive to college, work or shopping in which case a small car would suffice.
- If you have children, then you would need a bigger vehicle.
- Decide whether you would buy a new or a second-hand car.
For a new car, the positives are:
- For the first few years, there would be minimal repairs and you will have to spend primarily only on regular maintenance.
- New vehicles could be more fuel efficient which leads to savings on fuel over a longer term
- It will be covered under insurance and warranty.
- You can access roadside assistance in case you get stranded.
Negatives of purchasing a new car are:
- It is an expensive affair.
- Depreciation occurs by 25% as soon as you drive out of the showroom.
- If you buy it on a loan, you accrue debt.
- The insurance premium will be higher.
If you are buying a used car, the pros are:
- You get the best value for money.
- Old cars are cheaper, hence there is less debt.
- If you are lucky with a car that hasn't covered too many kilometres, then it is practically new.
The cons of purchasing a second-hand car are:
- There may be mechanical problems since it is a used car.
- Maintenance may be higher.
- It may be difficult to find a reliable model of the used car that you wish to buy.
- Look at your financial responsibilities which should give you an idea of how much you can outlay towards the car purchase.
- Consider financing options.
- Research online before you make your purchase decision.
- Compare dealer prices by checking classified ads and other online platforms.
2. Take into consideration any recurring costs
- Think carefully about owning and maintaining a vehicle. You should save enough to support your purchase and keep up with any recurring expenses.
- Budget for car insurance and registration, stamp duty, driving license, servicing, repairs, toll charges and fuel.
- Consider the cost of tyre changes every 3 to 5 years.
- Take into account battery changes every 3 years.
3. Make a budget and religiously stick to it
- Create a budget and make sure you do not steer away from it at all.
- Check your income and expenditures.
- See how much savings you can afford on a monthly or weekly basis.
- Depending on the model of the car that you wish to purchase, achieving the funds you need may take some time.
- Take in to account any market price fluctuations during this time.
- To keep yourself motivated, keep a picture of the car you wish to buy.
4. Cut down on expenses
- Buying a car is expensive, therefore you need to reduce your spending significantly. You can follow these steps:
- Keep away from the latest fashion and newly launched tech gadgets.
- If you are into books, consider kindle versions.
- If you are a music buff, try downloading individual songs rather than the entire album.
- Eat home cooked meals rather than going to restaurants.
- Consider sale items.
- Restrain yourself from impulse buying.
5. Think of ways to supplement your current income
- In order to save for a car, ensure that you have a job.
- Make sure that you have an income that is sufficient to cover your immediate expenses, any debt, save for your retirement and then keep away funds for your car purchase.
- Think of ways to supplement your current income by:
- Teaching students over the weekends or in the evenings.
- Consider part-time freelance work such as content writing, data processing, designing, counselling, etc.
- If you can cook or bake, think of selling jams, chutneys, cakes, cookies, etc.
- If you have any old things that are worth selling, then go for it.
- If you have spare change often, put them in a piggy bank which can accumulate into a substantial amount over a period of time.
6. Open a savings bank account which offers a good interest rate
- Look out for high-interest rate savings bank accounts.
- Deposit your savings towards your dream car regularly every week or month.
- You can also think of short term fixed deposits that can yield strong returns over 3 to 12 months.
7. Consider financing options
- When considering financing options such as a car loan you will still need to save towards the down payment. However, that is a more reasonable goal to achieve in a shorter duration of time.
- Car loans will have an interest element attached to it. Make sure you include that as a recurring cost towards your expenses.
- Think carefully about a secure or an unsecured loan option.
- Choose a loan that allows you to buy the car and also save for your future.
Armed with these tips, you should be able to save and become a proud owner of your first car. You may want to know these tips that will help you in the car buying decision.