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Save for your dream car

Verenaisi Raicola
Saturday, January 12, 2013

Have you ever really longed to own a car? Many believe that owning a car can take you places you would otherwise only dream of visiting.

You can actually plan trips with the family and enjoy the comfort of riding in something you own.

But before you can decide how much you should save up for a car, first determine which car fits your family's needs. Buying a car that doesn't do what you need, will end up causing you frustration, loss of time and money.

Whatever you decide on, make sure this is a purchase that you won't regret.

Do your research thoroughly says the eHow website.

Now that you've done your homework, you know an estimate of how much the car will cost you total out the door (OTD).

How much do you need to save for a down payment? Or maybe you want to save up for all of it?

If you're going to finance the car with an auto loan, it is recommended that you pay at least a 20 per cent down payment for no longer than 36 months. While longer loans reduce the monthly payments, they will cost you more in the end.

So now you know your savings goal. Take a look at your monthly budget and calculate how much you can spare per month for a car payment. Let's say it is $300 and your savings goal for a down payment is $3000, so that is 10 months. Each month, put this money into a savings account as if you are already making payments on a car. After your down payment, what will your monthly payments be? It should be no more than $300 a month since that is all you can spare. Make sure you take insurance, gas, and maintenance into account.

After your savings goal is reached, you are ready to buy. Shop around banks and credit unions for the best rate on an auto loan. Then shop around dealers for the best price on your car. Never fall for buying a car you can't afford.

A few years later, after you have paid off your loan, it may be a good idea to continue putting the $300 in your savings account as though you are still making monthly payments. This will help in case you need it for car repairs or you can even pay off your next car in full, costing you no interest.





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