For many Americans, it may seem as though living with a car payment is the only way to ensure that you have safe, reliable transportation. But you can save money and pay cash for a car you’ll love — and continue to remain debt-free. Here are some strategies for both finding an inexpensive, reliable car and for saving up the money to pay for it in cash:
Research, Research, Research
One of the reasons why buying a new car – and getting an expensive financing plan – feels so convenient is because there’s not that much research involved. Sure, you may check the Consumer Reports statistics on safety, reliability, fuel economy, and more, but once you’ve zeroed in on the particular car you want, you can just basically stroll onto the lot.
But if you’re going to buy a used car with cash, there’s a great deal more research you need to do.
First of all, you’ll need to figure out what is most important to you. For instance, over the past 10 years, excellent fuel economy has become the holy grail of car buyers — meaning cars with excellent mileage are much more expensive, even if they’ve got a few years on them. You may find that you can get a reliable car for much less if you’re willing to compromise on the MPG.
So do some research to find out what will be the cheapest car to buy and to own – including maintenance, insurance, and gas in your calculations.
In addition, regularly checking local classifieds, Craigslist, dealer websites, and the like can help you to know average prices for your area. For example, Toni at MoneySavingMom.com was able to discover that white vans would sell for less than any other color, and that Ford vans were generally cheaper than Chevys by regularly researching local sales sites. That kind of information was invaluable in helping her find a good deal on her family’s van.
Ways to Save Money for a Car
Once you know what kind of car you’re looking for, your price range, and when you want to buy the car, you’re ready to put your car savings into high gear. Simply divide your price range by your time frame, which will tell you how much you need to stash away each month. Even if you think there isn’t a single penny to be pinched from your budget, here are six ways to save money (and save quickly) for your new wheels:
1. Have a base amount of savings auto-debited from each paycheck.
You can’t miss what you don’t see. Even if all you can afford from your paycheck is $50 or $100 per month, setting that aside each month into a savings account you don’t touch will be enough to start a nice cushion of payment for your car. You can think of it as a reverse car payment — you pay yourself the equivalent of a car payment each month, until you’re ready to buy your car with cash.
2. Carry cash (and leave your credit card at home).
If you’re regularly sending a lot of your hard-earned money to your credit card company every month, you might want to try carrying cash instead. You’ll save a lot on impulse purchases if you remember that you only have $20 in your wallet.
3. Clean out the house.
Selling your unwanted items at a yard sale or on eBay can not only help you declutter your home, it can get you closer to your new car purchase.
4. Cancel services and memberships.
When’s the last time you went to the gym? How often do you watch the premium cable you’re paying for? You can put your savings into high gear if you cancel your unused memberships and services and put that money toward your car. (Bonus if you use the time you’d spend watching television to go for a walk — kill two birds with one stone).
5. Bank your raises and bonuses.
Rather than let lifestyle inflation get you used to extra cash in your paycheck, send that money directly to your savings.
6. Boost your income.
Finding a side hustle to do in your off hours is a great way to earn extra money toward your goal. You can find anything from dog-walking to house-sitting to lawn-mowing which will help your bottom line.
Saving money for a car you’ll love will take time and effort. That means you’ll take excellent care of your ride, and you’ll be that much prouder of the effort you put into researching and saving for your car.
Are you planning on purchasing a new or used car for your family? How are you going to pay for it? Leave a comment!