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How to Save up for new Car

Many people end up getting a loan to buy a new car. This is because, whether you are buying new or second hand, cars are expensive. You will find that you could pay out more for a car than you do for anything else apart from a home. Borrowing money to buy one can be convenient but it is not an option for everyone if they have a poor credit record or if they do not feel confident that they will be able to repay the loan. This means that for some people saving up can be the only option, for others saving up could be a much cheaper option and so is worth considering.

When to start

It can be hard to know when you might start saving for a new car. This is because you probably will not know when you will need one. Many people will keep a car until it is either unrepairable or the repair will cost more than buying a new car. It could also be the case that repairs are being needed more frequently and this is a problem as well. Some people will replace their car at regular intervals though or perhaps get a new one when they see a model for sale that they really want.

As it can be pretty unpredictable then it can be worth starting to save right away. Even if you have just bought a new car, it could be a good idea to start saving immediately for the next one. The reason for this is that cars are not cheap. The longer that you take to save up, the less you will have to save each month and that will mean that it will be easier for you to afford.

How to start

The first thing that you will need to do is to work out how much you are going to save. This can be tricky but you should be able to make some estimates. Consider how much you normally pay for a car and how long you normally keep a car for. Then you will be able to work out when you will need the money and how much you will need. Then divide that by the number of months that you have until you next buy one. This is how much you ideally should be saving.

You should then work out whether you can afford to save this much money each month. Look at your financial situation especially how much you usually get in income each month and how much you pay out. You will then be able to work out how much you will be able to afford to save. This might not toe up with the amount that you need, but that is something that may be able to be fixed later. At this stage set up a direct debit to go out the day that you are paid for money to leave your current account and go into a savings account so that it can accumulate ready to buy a car when you need it.

How to help

It is wise to try to do other things as well. This is especially important if you are not easily able to save as much as you need, but even if you can it can be good to add in extras to those savings. This means that if you need to dip into them for other things such as replacing white goods, car repairs etc then there will be a bit extra available for you.

Firstly, if you have money left in your account at the end of any month then pop this into the savings account. This could help to boost it up a bit. If you make any extra money, perhaps bonuses, premium bond wins, interest pay outs then put this in with them as well. You could also try doing some extra work to earn a bit extra or seeing if you can get a promotion or a better paid job. It is also worth seeing if you have anything you could sell to raise some money or even consider renting out your guest room, garage or attic to make more money. These things will allow you put in some lump sums of money from time to time. You might also want to think about what you are spending and whether you can cut back. Some of us will buy a lot of things and we might buy more than we need and have things that we have not worn, used or eaten and we may give away or throw away things which have cost us money. So, make sure that you are not doing this as it will waste money that you could otherwise have been saving towards the car.