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.

Learn more about how your credit score is calculated.

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.

TAKE THE PLEDGE


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

Tweet this now

Tip of the Day

  • Written by Guest Blogger | April 30, 2014

    Check out these 54 Ways to #save on groceries, transportation and more >> http://ow.ly/sfsPP

Saver Stories View all »

Making Savings a Part of Marriage

Written by Super User | November 26, 2010

Capt. Rob Eckhardt is the first to admit that he hasn’t always been responsible with money. But less than 10 years after a rocky start to saving, Eckhardt reports that he and his wife are free from credit card debt, have a down payment on a home, and are saving regularly for retirement. And, as the Military Saves representative for his Air Force squadron, he’s helping others make similar progress.

Read more...

Money on the Side

Written by Super User | November 26, 2010

Camp Arifjan, Kuwait -- A colonel in the 1st Theater Sustainment Command has money on his mind.

Army Col. George Fields, the Chief of Intelligence, or G2, has been teaching a free "Managing Your Money" class here in his spare time. More than 400 students have attended his six week-long class to learn more about increasing their own finances.

"All I did was sit down and listen to a guy one day who showed me what he was doing" said the colonel as he explained how he became interested in what he calls, "becoming financially free."

Read more...

A Disciplined Approach to Saving

Written by Super User | November 26, 2010

I just recently retired after 30 years of service with the Marine Corps. I truly enjoyed my time serving the Corps and I flourished in the disciplined environment. I also took a disciplined approach to saving. Here are some of the tactics I used-they are very low to moderate risk.

Read more...