How to save for your next car

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When it comes to transportation, there are many affordable options, such as walking, public transportation, or cycling. However, this is not realistic or even desirable for many, and at some point you might find yourself need to save for a new vehicle. The good news is that there are a number of ways to make this process more affordable.

Reduce monthly expenses to save for a down payment

When you go to a dealership to get a vehicle, you will likely need to make a down payment. This means that you put some of the money up front and the rest will be covered by a loan. To repay the loan, you will usually make monthly payments. It’s a good idea to save at least 20 percent of the total purchase price. It is often tempting to buy the vehicle before you have enough down payment, but try to avoid this unless absolutely necessary. The more funds you can put in now, the less you will have to pay on the loan.

To consider reduce your monthly expenses so you have enough to put towards the vehicle. For example, if you have a life insurance policy, you might consider selling it in order to get a lump sum to allocate to the vehicle. If you are considering selling your life insurance policy through a life settlement, you can consult a guide that explains the entire process.

Look at your existing budget

The nicer and newer cars don’t come cheap, especially as demand has increased. However, that doesn’t mean you should spend all your money on fancy extra features, such as a sunroof or wood panels inside. Determining your budget is easily one of the the most essential things to do when buying a new car. Set a budget and make sure you stick to it. Consider how much you can afford on a car payment each month. It’s best to avoid spending more than a fifth of your monthly income on car expenses.

Decide what you want and what you need

If you like the idea of ​​luxury features, like a leather interior, it can be tempting to get the latest and greatest features. However, they can be pricey, so try to prioritize what you really need. For example, maybe you want a car with certain safety features, and you might think that’s more important than the look of the interior.

The good news is, if you budget for it, you can probably get what you need. Still, you may not be able to pay for everything you want. You will also need to consider some additional expenses. The price of the sticker is only one cost of purchasing a vehicle, but you also have to factor in insurance, parking, maintenance and gasoline. It can all add up quickly, and you might be surprised at the costs if you’ve never had a car before. Look for something that gets relatively good mileage as it will save money in the long run. This is especially true if you are going to be traveling long distances or using your car to go on vacation.

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Image source: Getty Images With a little creativity, it’s probably possible to cut your budget …