Do you feel that your current car is on its last legs? Have you been making due without a car at all, but suddenly need one due to a new job or other life events?
Unfortunately, affording a new car isn’t easy. Median household earners can afford less than half the cost of a new car in most major cities. Cars are purchases that you cannot put off indefinitely. Unlike buying a new home, car purchases tend to be more urgent. You need to start saving for a down payment as quickly as you can.
The good news is that there are a lot of things that you can do to save for a down payment on a car more quickly. Things will be a lot easier if you are willing to be frugal and purchase a cheaper vehicle, because that means that your necessary down payment will also be lower.
It is a good idea to save more for a down payment and buy a less expensive vehicle. The average car loan takes seven years to pay off. You can pay it off more quickly by being more frugal.
Here are some tips to help you save for a down payment more quickly. You can find more tips from Qapital.
1. Make a list of expensive features that you can do without
Finding a car that gets you from point A to point B won’t be too difficult, regardless of your budget. However, the number of options available is going to decrease remarkably as you start being pickier about your options.
There are numerous features that you can look for when purchasing a vehicle. Some of these features are highly desirable, while others are pretty much worthless.
You need to start your search for a new car by making a list of different features. You should determine which ones are essential and which you can do without.
Most families are going to prioritize safety features. You might also want to look for reliability and future maintenance costs. The following features can almost always be avoided:
- Motorized seatbelts
- Electronic parking brakes
- Lane departure systems
- Spokes on steering wheels
- Environmentally friendly warning lights
You may also want to think long and hard before purchasing the most environmentally friendly vehicle. Although eco-friendly vehicles save money on fuel, most of them never pay for themselves over time.
2. Create a separate account for your future car
It is a good idea to have separate bank accounts for major purchases, such as a down payment for a car or a vacation. If you plan on purchasing a car in the near future, you should have a separate account where you automatically make deposits into it.
You need to set aside the same amount every month, so that you will be on track to meet your target purchase date. You need to start by coming up with a budget for a car and estimate the down payment that you will need to qualify. After you have done this, you simply need to divide the necessary down payment by the number of months that you need to wait to make the purchase.
3. Ask for help from your relatives
You might be able to get a relative to assist you with your down payment. While the bank has a requirement that you pay a certain amount to cover the cost of securing a loan, they don’t stipulate that you have to have earned the money yourself. You are well within your rights to get assistance from your parents, in-laws or Uncle Bill. They might not be willing to pay the entire price of the car, but they can help a lot with the down payment at least.
You need to make good on your promise to repay the money that you borrow for your down payment. Fortunately, it should be a lot easier. Your family members won’t hold you to the same standard as another lender. They will also charge a much more reasonable interest-rate, assuming that they charge you interest at all.
4. Consider taking on a second job or doing freelance work
You might be able to earn more money to save for a down payment if you take on another job. Even a low wage job that you work 10 hours a week could go along way towards saving for a down payment. If you don’t want the commitment of a regular job, then you can try doing certain types of freelance work that you can pick up when you feel like it. Gig worker sites like Upwork and Fiverr offer this kind of flexibility.
Of course, you need to make sure that you don’t take on more work than you can handle. You don’t want to risk losing your main job by burning yourself out with your second source of income. But you should be able to handle the extra job, as long as your primary employment doesn’t have extremely high expectations.