It’s close to impossible for you to buy a car in cash unless you have a high-paying job and you started saving at a really young age. Being able to afford the upfront cost of buying a car is difficult.
Hence, you might have to opt for car financing. Through this option, you pay the monthly cost, which includes a portion of the principal amount plus the interest. Eventually, you will finish paying off the loan.
The problem is that in most instances, you have to pay a down payment. The amount could be high. For someone like you, who hasn't saved enough money, it could be challenging. These tips will help you afford the down payment required for buying a new car.
Pay up all your loans first
It’s difficult for you to get a new loan and start a new monthly expense when you still have pending loans. You need to finish up all these other debts first. Another benefit of doing it is that you might improve your credit score. You will find better loan providers when your credit scores are good enough.
Stop unnecessary expenses
You have to check all expenses incurred each month and stop the unnecessary ones. Perhaps, you have a useless magazine subscription. You might also be a member of a local golf club, but you rarely play. You have to think about not pursuing these memberships anymore so that you can use the money for paying the down payment. Even if the amount doesn't seem huge, it could pile up to a considerable value over time.
Create a savings account just to buy a new car
You might also consider getting a savings account for a new car. You can't touch the account at all. Make sure that even if you have lots of expenses, your savings are intact. The best way to increase your savings is by setting aside a specific amount out of your monthly income first. From the remaining amount, you can decide what else to spend it on. If the savings come last, you will find it difficult to reach the necessary amount for the down payment.
Consider a no down payment option
Most loan companies require a down payment so that you can prove that you’re able to pay the loan. They also need you to pay an upfront cost to reduce the monthly fees over time. The good thing is that there’s an option where you don’t need to pay a down payment. It means that you can get the loan right away to buy your desired car even if you don’t pay anything immediately. You can visit website resources, car finance blogs, etc. for more information about this option.
The downside is that you have to make it up. Your monthly fees might be way higher than those for the usual loan. Therefore, only consider this choice when you can’t afford a down payment. You should also feel comfortable with the loan provider. Process your application and start driving soon.
Updated Date: 05 September 2019, 15:00