A car might be one of the most expensive items you will ever buy. When you save up money for a down payment, you will have to finance less of the car, which will save you more money in the long run. Here are five steps on how to save for a down payment.
- Set a goal. If you have a specific kind of car in mind and a good idea of how much it will cost, you can set a goal for a down payment. If you are buying new, aim for 20% of the cost. For used, 10% of the cost will suffice.
- Track your spending. Go through your checking account and track where every dollar goes. Do this for a couple of months to get an idea of how much you are spending on certain items and services.
- Cut back. After tracking your expenses, you might realize you spend $100 a month on buying coffee. Cut back on items like this and put the money you save towards your down payment.
- Open a savings account. Make your savings easy by having a portion of your paycheck automatically deposited into a specific account.
- Trade in your old car. Many people forget that a trade-in counts towards a down payment. Use online tools like KBB.com to get an idea of what you can get for your old car.
For more information about down payments and to answer any vehicle financing questions, contact us at Jimmy Michel Motors. Our Finance Department will be glad to share their expert knowledge.