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PostHeaderIcon Saving Money for Your First Car Purchase

Article Source: Online Shopping Store

There comes a time in most people’s lives when they want to buy a car. Most first cars are purchased by people in their late teens or early twenties. Most people this age typically have a lot of expenses and a tight budget because of tuition and/or low-paying jobs. If you’re looking to buy a car, check out the following tips to save money on your first purchase.

Make Sure You Can Afford a Car

Brandon's First Car

Image via Flickr by Tobyotter

If you want to make your first car purchase, the first thing you need to do is look at your budget to see if you can afford one. According to the U.S. Bureau of Labor Statistics, it costs the average driver $8,000 per year to own a car. This includes gas, monthly financing payments, car maintenance, and repairs. It’s probably a bit on the high end for your first car purchase, but you do need to do your research to see how much you can afford.

Set Aside Money Every Month

Piggy Bank

Image via Flickr by Hummy

Most dealers require you to make a down payment on a car, especially if it’s your first purchase. You’ll need to start saving money by putting a little bit aside each month to cover your down payment. Depending on the price of the car you want to purchase, you might even be able to save enough to pay for the car without financing, which would be the ideal situation as it will save you thousands in interest payments.  Consider having money automatically added to your savings account every paycheck—it will help ensure you are meeting your savings goals without the hassle.

Use a High-Interest Savings Account

Interest Rates

Image via Flickr by 401(K) 2013

When you are saving money for something specific, like a car, it’s a good idea to put that money in a high-interest savings account so that it grows faster. There are usually rules on these types of accounts, like you have to maintain a minimum balance or you are only allowed to withdraw money at certain intervals. So, if you plan on buying your first car, but the purchase is six months to a year away, a high-interest savings account may be a good option for you.

Decide How Much Money You Want to Spend

Balancing The Account By Hand

Image via Flickr by kenteegardin

This is a critical step when you are looking to buy your first car. You have to keep in mind that older cars typically need more repairs, but they come at a cheaper price. Of course, you also need to factor in the price of insurance. So, before you go to a dealer, you should compare car insurance companies so that you have some idea on the cost. Don’t fall into the trap of buying a car based on how much you will make someday, base your budget on your current income.

Learn About Financing Options

Millennials On Car Ownership

Image via Flickr by GEEKSTATS

If you can’t save enough money to buy a car without financing, you need to look at all of your options. If you haven’t established credit yet, this might be tricky. So, the best thing you can do is have a large down payment to show you are serious and capable of making payments. You should apply for a car loan at several places to find the best interest rates and promotions. What you don’t want to do is settle for the financing offered by the car dealer. You need to know all of your options.

Buying a car is a big step up in the world. Do you have any other tips for people that want to purchase their first car?

Author Bio: Jake Fisher is a freelance writer with a healthy love of culture. Catch him on the blogosphere writing on topics from tech to beer or whatever piques his interest.


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