When you’re in the market to buy a new or used car, you likely are going to want to get the best car your money can buy. The trick here is knowing how much money you have to spend on a car. With the help of financing, you won’t have to pay the entire amount for the car upfront. However, to get the best financing options, you often want to pay a decent amount of money as a down payment in order to secure a good interest rate and not get upside down on your outstanding balance. To help you figure out what’s going to be best for you, here are three tips for saving money for an auto loan down payment.
Figure Out How Much Of A Down Payment You’ll Need
If you haven’t figured out your financing before you go to the dealership, you’ll often be told that you don’t actually need to put any money down in order to get the car you want. While this can be technically true, this isn’t in your best interest. For this reason, you’re going to want to determine how much of a down payment you’ll want to secure before you begin seriously looking at cars.
To best do this, Trent Hamm, a contributor to TheSimpleDollar.com, recommends looking at things like your credit score, the type of car you’re wanting to buy with its total price, and what you can afford as a monthly payment. By balancing all of these numbers out, you should be able to figure out how much money you’ll need to save up for a down payment in order for all the other numbers to fit correctly for you.
Get The Timing Right
Once you’ve figured out the total amount you’ll need for your down payment, you’ve got to calculate when you’ll need that money by. The timing of this will help to determine how much you should be saving each month. Jeff Reeves, a contributor to USA Today, reminds us that the sooner you need your car by, the faster you’ll have to save your money. If at all possible, try to plan to start saving before you’re in dire need of a new vehicle. This will give you the time to slowly save so you don’t feel too much financial pressure in just a few months.
Price Out Loan Financing Quotes
A big factor in how much you’ll want to save for a down payment will depend on the rates of your financing options. To get the best rates for yourself, David Weliver, a contributor to MoneyUnder30.com, suggests getting quotes from online lenders as well as local banks or credit unions before you head to the dealership. By doing this, you’ll be able to pick the absolute best terms for your auto loan right before you decide to make the purchase on your new vehicle.
If you’re planning to get a new car soon, use the tips mentioned above to help you prepare for saving up for your down payment.