I knew my old Nissan Altima was failing when I couldnt turn on the air conditioning.
And again when it shut off at a red light.
After patching each problem only to be stranded by another, I finally gave up on it.
Mallory Evans/The Penny Hoarder
I was carless for months.
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How to Save Money for a Car in 6 Steps
1.
Figure Out How Much Can You Afford to Spend
Knowing is half the battle.
Once you pinpoint how much you might afford, youll know what to save.
Calculate all your basic monthly expenses.
Do not include extras like cable, groceries or gym memberships.
What do you have left over?
Did you know?
It will be considerably less than that.
Jane also needs to eat and will likely have other expenses.
Well discuss how to cut down on those variable costs in the last step.
Some questions to consider when buying a car include:
Be honest with yourself.
If you make $18,000 a year, stay within your means and skip the Lexus.
But new cars are expensive and depreciate relatively quickly, and they often come with higher insurance premiums.
Not everyone can afford this commitment.
Aint no shame in going the used route, either.
Lower monthly payments, insurance premiums and registration costs might makebuying a used carmore appealing.
And if you save up, you could purchase a used car in one shot.
But if you buy a car without a warranty, you may pay extra for maintenance and repair costs.
Know what compromises youre willing to make ahead of time.
For a $20,000 new car, plan to pay at least $4,000 upfront.
The most common auto loan terms are 36, 48 or 60 months.
Use an auto loan calculator to estimate your monthly payments.
Using the Jane example above, we know that she can afford this payment with her current income.
Loans can be secured from a dealership but also from a bank, credit union or other lending company.
Recurring costs like insurance, gas and maintenance are mandatory if you want those four wheels to go anywhere.
If you buy used, consider a warranty or maintenance plan.
Theyll cover the costs of certain repairs or service jobs, depending on your specific warranty or plan.
you’ve got the option to purchase one from the car dealership or a third-party vendor.
Evaluate Your Current Cars Worth
If you have a car to trade in, it is an asset.
Every little bit you’re free to take off the sale price counts.
Another option might be to sell it yourself locally or use a third-party service likePeddle.
Save that cash toward your down payment, or add it to the car repair emergency fund.
Save Up for Your Car
Remember when I said, Knowing is half the battle?
Well, doing is the other half.
If you really want a car, youre going to have to make sacrifices and commit tosaving money.
Here are some ways to get started.
Think about wants versus needs to decide what you might forgo as you save money.
A few ideas:
Dont tighten your straps too hard, or else youll be headed for a binge.
An occasional treat to reward yourself is deserved just dont lose sight of your goal.
Small changes in your spending habits will make your car fund grow rapidly and keep you committed to saving.
As Penny Hoarders, were well-versed ingetting thatside hustle on.
Every little bit counts; just $20 here and there can add up when its time to buy.
Use or open a savings account, and regularly contribute to it.
Staying disciplined makes things easier.
Just focus and be diligent about saving up for your next set of wheels.
Stephanie Bolling is a former staff writer at The Penny Hoarder.
After her recent purchase, she hopes to not buy a car for another 14 years.
Senior Writer Nicole Dow contributed to this post.
(Can you sense my millennial sarcasm there?)
You know which ones were talking about: rent, utilities, cell phone bill, insurance, groceries…
