Buying a car is a big milestone, particularly if it’s your first car, and saving up for it is an art form that many struggle with. It takes a lot of discipline to stick to a savings plan. So here are some tips on how to save up for a car:
- Establish a budget – The first thing you need to do is establish how much you can afford to save per month according to your salary. Ideally, this would be 30% of your monthly salary. Be realistic about what you can afford. Do not neglect your other monthly expenses like food, rent, etc. When saving, consider insurance, petrol, etc, in your budget.
- Check your finance options – In South Africa, the motor industry offers a variety of finance options that can assist you when buying a car. [Saving for a reasonable deposit and financing a car can help reduce the amount of money owed. The bigger deposit you can put down on a new car, the less you’ll have to borrow to make up the purchase price, and it increases your chances of being approved for finance.
- Start a savings account – Once you have established how much you can afford to save every month, open a savings account as soon as possible. If you’re more of a spender than a saver, the best way to save is to set up a monthly stop order on your cheque account that is paid into a savings account. Make sure you are realistic about the amount you can afford. Do not be tempted to save a large amount of money that will leave you destitute every month. Speak to your bank manager to advise you on options for how to save money effectively.
- Do your research – Never rush into buying a car. Make sure you do some thorough research. Research the resale value of a car, how economical it is, and different payment options. Ensure that you include other costs associated with buying a car, such as maintenance, insurance, and monthly fuel.
- How much of a deposit should you save up – Ideally you should save a minimum of 10% for a deposit, but saving more will put you in a better position in terms of paying a much lower installment rate and getting approved. Once you have saved up a sizeable amount, do some calculations on repayment costs and on the amount that you plan to borrow. Most banks have repayment calculators on their websites.
When buying a car, especially through finance, never go beyond what you can afford. According to your budget and salary, check whether you qualify for a new or a used car. At Kelston Motor Group we have a variety of brands and cars (New or Used) that you can check if you qualify for. Browse our website, click on the brand you are looking for, click on a car you are interested in, and check if you qualify.
Article credit : AutoTrader
