What is your dream car? Is it something with lots of grunt or super sleek and sexy? Is your current car on its last legs? Or maybe you’re looking to get into your first car and gain true independence? Whatever the reason, your dream car isn’t likely to appear overnight in your driveway. You’re most likely going to have to get a car loan and in order to do this, you’ll need a deposit. Here are three tips on how you can start saving that deposit and finally make your dream a reality.
[box type=”info” align=”aligncenter” ]Though you should always strive to buy your car in cash, sometimes that is just not feasible, or you can get a loan and pay very little interest. No matter why you choose to go with a car loan, make sure you calculate all of the costs accordingly.[/box]
1. Make a budget and stick to it
The first thing you really need to know is how much disposable income you have out of every paycheck. In other words, what do you absolutely need money for (eg. rent, food, bills) and what can you go without (eg. coffee, entertainment, shopping trips, etc).
This will help you determine what percentage of your income you can afford as car loan repayments. All money lenders, whether it’s a car loan or mortgage, base the amount they’ll lend you (the ‘principle’) on an affordability test. If you don’t have enough disposable income to make the necessary minimum repayment amounts each month, then it’s thumbs down for your loan application.
So fire up your calculator and do your sums. Once you know how much your disposable income is, you’ll be able to get some ideas from online calculators on how much you can borrow, how long it’ll take you to pay your loan off (the ‘term’) and how much interest you’ll pay over that time.
2. Set up a dedicated savings account
When I saved up for my first car I opened an extra savings account purely for my car loan deposit. I’d been knocked back on my first loan application and didn’t want it happening again and affecting my credit rating. Each time you apply for finance your credit gets checked, so for each unsuccessful application you make, the worse your credit rating starts to look. Within six months, I had a healthy deposit, got my loan and picked up my shiny new car a week later!
3. Get the right finance
When looking for a car loan, shop around. Think of it as a product, exactly like buying a new television or computer. You’re the customer and you want value for your money and great customer service. If you’ve had problems in the past with money and/or finance applications, you’ll need a specialist lender who can draw from a group of lenders who may be more flexible and whose products are better suited to your needs. Even if you haven’t got bad credit, a car finance broker can do all the leg work for you and save you a bundle by negotiating better loans rates and terms. Check out a broker such as TrueCar in the US, Car Loan 4U in the UK, and Dreamloans in Australia to see how they can help you make your dream a reality sooner than you think.
We’ve all got dreams in life, but the only away to achieve them is to have a plan. Get your plan in place, start saving and in no time, that shiny new beast will be yours!
Image courtesy of flickr