Getting a new car is so exciting. But after interest, your car can cost almost double the original purchase price. So, why not buy your car in cash? It seems daunting, but you can make changes now for your next car purchase – interest free. Try the following tips for the best ways to save for your next car purchase.
1. Keep Paying the Bill – Of course you make your current monthly car loan payments faithfully. But, once your ride is paid off, keep the habit. If you continue to contribute your $400 car payment to a savings account after the car is paid off, you will save $24,000 in five years towards a new car.
2. Save with Interest – Interest can be a bad thing when financing, but saving with interest is essentially free money. Open a savings account that earns interest from companies like Ally.com or Ingdirect.com. If you have some time before your new car purchase, consider a CD. With CDs, the longer the money is in the account, the higher the interest rate. CDs require a minimum amount but force you to leave your money alone to mature. Which means you cannot withdraw (without hefty fines) from the account for unnecessary purchases.
3. Cut Expenses – Forgo the landline, recycle, carpool or cook at home to reduce monthly spending and allow you to contribute more towards your dream car savings account. Trade convenience for cash and cook two more meals per week than you normally do, saving more than $4,000 per year towards your new set of wheels.
4. Maintain your car – make sure you perform regularly scheduled maintenance on your car to guarantee a higher trade-in value towards your new ride or to lengthen the amount of time you get to save (as in example #1).
5. Shop around – Your diligence in finding the best deal on the new car could make the difference of thousands of dollars. Visit sites like autotrader.com, cars.com or Edmunds.com to compare prices and features from cars across the country. In addition, shop your trade-in. While the dealership is a convenient place to trade, they aren’t likely to grant top dollar on your old one. Take it to other dealers or sell it privately for a better deal.
This was a guest post by GoInsuranceRates.com, a site that provides daily updates on the latest auto insurance rates, finance information and more.
