𝐇𝐨𝐰 𝐭𝐨 𝐒𝐚𝐯𝐞 𝐟𝐨𝐫 𝐚 𝐂𝐚𝐫 𝐢𝐧 𝟐𝟎𝟐𝟑

Buying a car is basic math. If you can do basic adding, subtracting, multiplying and dividing, then you’ll figure this one out. If not, let me help break this down for you.

Now, let me begin by saying, this is NOT an article encouraging you to borrow money. I NEVER tell people to get a car loan! Borrower is slave to the lender? No thank you! I REFUSE to encourage people to get a car loan and be a slave to these evil, lender giants for half a decade or more.

Need a little fuel for the fire? Check out this article by CNBC, Credit Card Debt Can Be Bad for Your Health.

On my blog, it’s cash only!

From there it’s simple math in determining how much you are willing to spend, how quickly you need the vehicle, and how much you are able to save each month as you prepare to purchase the vehicle.

And perhaps you need to kickstart this journey with earning some extra income? Check out my podcast, Success by 1,000 Wins podcast, episode 7, $1,000 Emergency Fund in 30 Days (30 Ideas for Creating an Income), Part 1 and Part 2. These two episodes have AMAZING ideas for getting quick income!

So, let’s begin!

𝟏 – 𝐇𝐨𝐰 𝐒𝐨𝐨𝐧 𝐃𝐨 𝐘𝐨𝐮 𝐍𝐞𝐞𝐝 𝐭𝐡𝐞 𝐂𝐚𝐫

That’s a big deal. It’s a big question to begin with. Is this urgent? Do you have six months to save for a car? Two years to save for that next vehicle? This question will be important in the third step I present so, know this number. And as a quick added reminder, don’t be a drama queen about it. I’ve done this TOO many times in car shopping. Take the car to the shop, they tell you it needs some repairs that are beyond your financial capabilities so instantly you go home thinking, “I NEED TO BUY A NEW CAR!” False, you need to take a chill pill, assess your situation, go back to the auto shop and work through how you can extend the life of your car out until you can purchase a new one.

𝟐 – 𝐊𝐧𝐨𝐰 𝐇𝐨𝐰 𝐌𝐮𝐜𝐡 𝐘𝐨𝐮 𝐖𝐚𝐧𝐭 𝐭𝐨 𝐒𝐩𝐞𝐧𝐝

This is the more sensitive part of the conversation. For those of you who have managed money a while and perhaps a little further along in life, you maybe able to answer casually, “I’m looking to spend $10,000-$15,000.” For those of you who are in a more pressing situation with less financial resources at your disposal, you may calculate that within six months you can save $5,000. And that’s great too!

For you number nerds out there, like me, and you really don’t have a dollar amount that comes to mind or perhaps you’re attempting to be responsible with your purchase, let’s talk percentages. My brain thinks in terms of a year. Whenever I make big money decisions I think, how much do we make in a year. And then the next question for you to consider is, what percentage do YOU want to spend of your income, on a new car purchase?

5% of your take home for the year? Let’s say you plan on bringing home $50,000 this year. Do you want to spend $2,500 on a new car? Or 10%, $5,000 for a new car? Would you be comfortable spending 50% of your take home? $25,000 out of our $50,000 for buying a new car? We are all adults and you need to make that decision.

Me personally, I would NEVER spend more than 15-20% of mine and my wife’s yearly income on a new car. At least not until I hit a certain net worth. To me it’s irresponsible, but more importantly, it’s a waste of money. Cars are depreciating assets. They go down in value – quickly! If my net worth were $500,000 and I bought a $50,000 car that 3 years later is only worth $10,000? My Net worth just went down $40,000! No…thank you!

Decide how much you want to spend. And, decide prior to car searching. Lock in the amount. Don’t start car shopping where you will talk yourself into spending $10,000-$15,000 more than you originally decided. It’s all too easy to do this.

𝟑 – 𝐀𝐝𝐝 𝐢𝐧 𝐀𝐧𝐲 𝐂𝐨𝐧𝐭𝐫𝐢𝐛𝐮𝐭𝐢𝐧𝐠 𝐌𝐨𝐧𝐞𝐲 𝐨𝐫 𝐄𝐪𝐮𝐢𝐭𝐲

Are you selling a vehicle in the process of purchasing a new car? Be sure to factor this in. For example, if you’re selling a car that you’ll get $3,000 for, be sure to account for this amount. You’re willing to spend $15,000 cash on your next car plus you’ll get $3,000 from the sale of your current car. Or perhaps it’s $15,000 tops! Which means you’ll pay $12,000 in cash plus $3,000 from the sale of your car. Factor this into the equation when you are car shopping.

Then take the total that you would like to spend and divide it by the months you’ll need to save (if you don’t already have the money set aside).

𝟒 – 𝐃𝐨 𝐘𝐨𝐮𝐫 𝐑𝐞𝐬𝐞𝐚𝐫𝐜𝐡

Do NOT just walk onto a car lot and ask a SALESMAN, or SALESWOMAN, whose job it is to SELL you, what you should buy. Buying a car is one of the larger purchases in your life. You don’t ask someone what and how much you should buy. It’s time to be a grown up. Research some cars. Use Kelly Blue Book. Use Carfax. You could research in your price range. Research reliable vehicles. Compare a car you like from several different sellers. Be mature about your car buying and NEVER let a stranger tell you what you should buy.

(I do NOT receive compensation of any sort for promoting KBB or Carfax – they are just great, free tools)

𝟓 – 𝐓𝐚𝐤𝐞 𝐘𝐨𝐮𝐫 𝐓𝐢𝐦𝐞

Visit the car lot or lots of the car you have narrowed it down to. Introduce yourself to the vehicle of interest. Walk into the dealership with a reasonable price for the vehicle. Maybe it’s $500 less than the sticker price? Let the dealer know how much you have to spend on the vehicle. Now, if you have $30,000 and you’re buying a $20,000 car, you don’t need to tell them THAT much info. You see they’re selling a vehicle for $20,000 and you have $19,500 to spend. See if they’ll take it. Be willing to walk out that day if they won’t. Let them know, call me when you will. I remember doing this with the Acura I am driving. We were in NO rush. Offered under the sticker price. The salesman said no. The manager said no. Waited less than 30 days and got a call from the salesman. Apparently all of a sudden the car was discounted for the amount we had hoped. Be patient!

𝗦𝘂𝗺𝗺𝗮𝗿𝘆: 𝗬𝗼𝘂 𝗔𝗿𝗲 𝗜𝗻 𝗖𝗵𝗮𝗿𝗴𝗲

When making any large purchases in your life, including one such as buying a car, take…your…time! The one who is in no hurry always wins! Don’t rush making this purchase. And against conventional wisdom you CAN make this purchase with cash. It may take a little time, a little planning, a little extra work, but you can do it!

Photo Credit: Photo by serjan midili on Unsplash

ABOUT THE AUTHOR

Michael Kopans is here to share ideas for helping 1 million people reach a million dollar net worth by using money principles he’s learned over the years. Let’s talk money, budgets, becoming debt free, financial wisdom, financial principles that work.

money, budget, marriage, biblical wisdom