As your family grows, you may find yourself needing a new car to accommodate everyone, including all the kids, their friends and the family dog. When the time comes to invest in a people carrier, you may fear that it is unaffordable. Cars can certainly be expensive, but with smart saving and financing, you could be driving your family’s dream car in no time. You may need to find a side hustle to stretch your money or you might be okay on your current income. Each family has a unique circumstance, but here are a few general tips to help you finance your perfect family vehicle.
Setting a Budget
Before you start saving and looking around, you need to be realistic about what you can afford. This can be a confusing process, since many new cars will be more than your entire salary. This is why many people choose to finance. So how much should you set aside? Financial experts recommend the 20/4/10 rule.
Aim to pay for at least 20% of the car up front, leaving 80% to be paid with finance. You should only finance your car for 4 years. If it takes you longer than that to pay it off, you can’t afford it. Finally, only set aside 10% of monthly paycheck to paying for the total vehicle costs. That includes the loan, tax, insurance and everything else. This is a good rule of thumb and helps you to decide on a budget. You can also get an appraisal for vehicles you’re interested in to see if they are within budget.
How to Save
Once you’ve found the price range you’re interested in, you need to take 20% of this as a saving target. If you have this amount in your savings account, then great! If not, open a new dedicated savings account to which you can donate each month.
There are many simple ways to save money. Try to find any luxuries you can cut out while you raise the deposit. Maybe eat out less and cook more or find small ways to reduce utility bills. For example, consider playing new games with your children instead of turning on the television some days. They’ll have more fun and you’ll have a little more money to put towards that dream car.
These are the two first steps. Once you’ve sat down and worked out a realistic budget, you need to start saving. After this, find a vehicle which serves your needs and can be paid for within four years. By being strict, you can narrow down your options quickly and be sure you have a dream family car which is also affordable.