How to budget and save for a new car

Posted by: Cal on 21/01/2014

Category: General

If the time has come to upgrade, replace or even buy your very first car, you might be facing a steep bill and confusion over how you're going to save up for that important vehicle. But fear not! While a car is a big purchase, there are some easy tips to make the budgeting and saving process easier. Take a look at a few of the most important steps.

Think about what you want

Selecting your car should go beyond simply which colour and style looks best in the car yard. Vital features like tyre safety, the ANCAP rating, how the car handles in inclement conditions and how expensive repairs and replacements will be should all be taken into consideration.

If you have your heart set on an imported European car, you'll need to take into account the increased cost of repairing and replacing parts if they break. If a vintage restored car is more your thing, you should consider the reliability of this over long distances.

Your lifestyle should always play a part in selecting the perfect car for you. If you frequently go off roading and love driving on rough terrain, tyre performance and engine power may be more important to you than aesthetics.

Safety should be paramount when buying a car, so make sure you do your research before you make the big decision. Look for a four or five star ANCAP rating and surf the web for consumer reviews to ensure you're getting a good deal.

Set goals and plan

Once you've decided on the car for you, it's time to plan out how much money you're going to put aside and when you expect to buy the car. Be realistic about this, as there's nothing more disheartening than taking three times as long to do something than you'd hoped.

It's important to factor in any extra costs that come when you first buy a car, such as insurance, registration and even that first tank of petrol. Factor this into your total budget to ensure you're not left disappointed when it comes to purchase day.

Paying for your car outright will also work out cheaper in the long run than paying it off through a plan, so try and save up a lump sum rather than rushing into a pay-it-off program.

Map out your weekly budget, including food, entertainment, bills and extras, then see how much there is leftover to put aside for your car fund. Set up a separate savings account for this and don't touch it. You could set up a direct deposit that comes automatically out of your regular pay, so the money is transferred to your car fund without you even noticing.

A spreadsheet and graph system, which can be found for free at many online savings websites, provides a rewarding way to track your money and make you more accountable for your spending.

Shop around

Once you've hit your target and saved up enough for your big purchase, double check to ensure the same model isn't available elsewhere for cheaper. This may involve visiting several different dealers, checking online and even investigating second-hand options. This could end up saving you a lot of money that can then be put towards your regular service schedule, as well as fuel and any unexpected parking tickets.

It's also a good idea to chat to dealers about any specials or discounts you can get for paying in full or in cash. You never know until you ask!