Saving up to buy a new car can be a real test of patience. Especially if you need a new set of wheels immediately! So how can you buy your car of choice and not overshoot your budget drastically?

Some easy ways to do this are:

Make a trip down to the used-car lot:

When working on a budget, try to steer away from new models which come at a high sticker price. If your primary need for a car is transportation, explore the option of an older model. Spending a little extra time shopping around for a well-maintained second-hand car can save you a lot of money. The value of a car drops considerably once it leaves the showroom and even more so the following year. A car that’s just over a year old and barely used will get you practically the same car at three-fourths (or less than) the original cost. Make sure your know what you’re getting into though. If you’re not an auto-savvy person enlist the help of a family member or friend who is so you don’t get stuck with a lemon. Strong bargaining power can help add to the savings on your car.

Pay cash:

Creating debt on a depreciating asset is not advisable unless necessary. If you have adequate savings, pay cash for your car instead of taking a loan. The interest you repay over the life of the loan adds to the cost of the car. The car will not be worth the payments you make as the loan tenor progresses being a depreciable assets. If you have ways of raising the cash required, do it e.g. selling off some unwanted household items or tightening your monthly budget for awhile or utilising annual bonuses etc.

Take a loan with a short tenor:

If you think you can afford the car you want but not all at once, you can opt to finance it through a loan. Keep the loan tenor short though. This is because the longer you draw out your payment plan, the higher the interest. If you keep your tenor short you can pay off the interest faster keeping additional costs to a minimum. You’ll have the required funds for an immediate purchase without burdening yourself with too much debt. It may put a damper on some of your other personal expenditure but making the sacrifice means bigger savings. Getting a pre-approved loan will let you know the loan amount you’re likely to qualify for. This can help you decide the price range of the car you should buy.

Bargain for a better deal:

Most people mistakenly assume that showroom prices are fixed. This isn’t true. Dealers try to hike car prices to account for various marketing, administrative and finance costs. You can always bargain for reductions. If not a price markdown, dealers will often offer deals or freebies on accessories. Also, if you visit showrooms at times when business is slow, dealers are bound to offer discounts to meet their targets.