4 Steps to save for a car.
Buying a car can be intimidating. Salespeople can be aggressive, rates are often confusing and monthly payments can seem frightening. It’s a lesson you learn the first time you buy a car: make sure you’ve done your homework or the details may go over your head (until you get your first bill).
Before you sign that deal, make sure you’ve followed these steps:
1) Calculate your budget. What can you reasonably put towards a down payment and what you can afford to pay each month?
- If you’re paying for your car in full, you won’t need to worry about monthly payments. Instead, you’ll need to decide how much you can afford to dish out at once.
- If you’d be more comfortable with a loan, look at your current bills and see what you can afford to pay each month. Leave yourself a little wiggle room, since you will also have to deal with routine car maintenance. Gas, oil changes and repairs can really add up!
Remember – the larger your down payment, the lower your monthly payments. Put as much down as realistically possible.
2) Decide when you need the car. The math is pretty simple: the longer you wait to purchase a car, the more money you’ll be able to save.
“You need to be realistic when it comes to saving for a down payment,” Chip Pfohl, assistant vice president, Consumer Lending for Northwest, says. “Set your goals based upon your monthly take-home income and your purchase time frame.”
Cars break down. Accidents happen. Plans change. If you need to make a purchase fast, you may have to adjust your budget.
3) Start saving. The easiest way to save money is to make it automatic. Arrange your direct deposit to put a certain amount of your weekly pay into a separate account. You’ll get used to living without a few extra dollars each week, and you don’t run the risk of “borrowing” the money you intended to save. Remember, you can set up automatic transfer service from Northwest Online Banking. As you save, shop around for the best auto rates, deals and options.
“If you choose to finance your car, it’s worth noting that the interest rate will play a big part in how much you will pay each month,” Pfohl says. “Some dealers offer financing, but you would be well advised to shop around and check rates to ensure that you get the best loan rate and the lowest costs.”
4) Consider a loan. If you don’t have enough money right now to pay for a new car – and few of us do – you will need a loan. Now it’s time to take an honest look at your credit rating.
You want your credit to look as good as possible since it will affect your interest rate, and therefore your monthly payments. Before making a major purchase, you should see if there’s anything on your credit report that needs fixing. Any errors or negative information may keep you from getting the car you want.
Need an auto loan? Your first step should be meeting with a Northwest representative, who can answer all of these questions and help you with your auto-buying game plan. Visit your local office or call 1-877-672-5678.