Saving to buy a car? Here’s what you should know.
Whether you're preparing to buy your first car or replace a current vehicle, you will need to first determine what kind of car you want and how much you can afford.
While buying a new car has its perks, it can get expensive. The average cost of a new car in early 2017 was around $31,000. Given that most new cars depreciate by as much as 50 percent in the first three years of ownership, you might want to consider buying a used car that's about two to three years old.
Ready to get started? These three tips will have you well on your way to saving and buying a new (or new-to-you) car:
Figure out how much you can afford. Determine what you can afford, and be realistic. The last thing you want to do is purchase a car that's out of your budget that you will struggle to pay for each month. If you are not sure what you can afford, experts recommend that your car payment not exceed 10 percent of your gross income. There are also several car buying calculators available to help you determine how much you can afford.
Also, don't forget to calculate into your budget insurance costs, money for gas, maintenance costs, and in some states personal property taxes. They can add up quickly.
Get your credit in order before applying for a car loan. Your credit score will determine what kind of loan interest rate you can get, and may also affect how much you plan to put down when purchasing a car. If you're preparing to purchase a car make sure you've been paying your bills on time and reducing debt these two factors account for 65 percent of your credit score.
Shop around for a good car loan interest rate and check with prospective car dealerships to see what type of financing specials they are offering.
To order your free annual credit report, visit annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
Make a savings plan. Once you've decided to buy a car and know what you are looking to spend, come up with a plan to save for your down payment. Set up a separate savings account for your "car fund" and have the amount you wish to save directly deposited into that account each month so that you don't even see it. Saving automatically is one of the best and easiest ways to save.
Need some support to reach your car savings goal? Take the Military Saves Pledge and we'll send you tips and information to keep you motivated towards saving for that down payment soon enough.
While buying a new car has its perks, it can get expensive. The average cost of a new car is around $31,000: http://bit.ly/2gIQPmx
- Written by Lani Poblete
- Category: Blog
- Published: 27 October 2017