Ways to Budget and Save for Your Next Vehicle
Are you excited to buy your next vehicle? Whether it is your first car or an upgrade over your current ride, it’s important to be prepared financially before selecting your next ride. Here are some tips for financing for a pre-owned car at U.S. Auto Sales!
Calculate What You Can Afford and Stick to Your Budget
Everyone’s financial situation is different, which means your budget likely won’t be the same as another shopper looking for their next vehicle. Before beginning the car shopping process, you should calculate what you can afford and, once you set a budget, stick to your budget. The general rule of thumb is to have your car expenses exceed 10% of your income. For instance, if you make $3,000 a month, you can afford to spend up to $300 a month on your next vehicle. Remember that this includes all car costs, including the loan, interest, insurance, gas, etc.
Keep the Loan Term as Short as Possible Without Exceeding Your Monthly Budget
Additionally, you will want to keep the loan term as short as possible without exceeding your monthly budget. Ideally, buyers should keep their loan term to no more than four years. However, if you can afford a shorter loan, such as three years, it’s encouraged to consider that instead. Another tactic you could use to shorten your loan term is to accept the four-year loan and make extra payments as you are able. Regardless of the strategy you choose, it’s important to remember that the less time interest has to build, the more money you will save in the long run.
Save for a Down Payment
Finally, you will want to save for a down payment. 20% is the ideal amount of cash to put down for a vehicle as this will help lower your monthly payments and reduce the loan principal. If you have more than 20% available and don’t need the extra cash for something else, consider putting more than 20% down.
So, how do you put aside money for a down payment? You can save for your down payment by doing a variety of things, such as adding some cash to a car fund each month, selling some unwanted items, or picking up a side hustle – whichever way works best for you! Also, it’s never too early to start saving for your next car, so we encourage you to start saving as soon as you are able.
[ READ MORE: How You Can Save Money for Your Next Car ]
Wondering if you can afford one of our cars? Our team at U.S. Auto Sales will be happy to help you find a vehicle that fits your budget. Can’t wait to see which loans you qualify for? Complete our online pre-qualification process here!