For some time now, we’ve become accustomed to increasing costs of living. Day-to-day living expenses are on the rise, and let’s not even mention those skyrocketing utility bills each month. With wage growth stagnant, it means Australians are finding it more difficult to save money each week.
If you’re among those considering a new car, this dilemma means that it can be a struggle to put aside a deposit or fulfil repayment obligations on your loan. Fortunately, we have some key tips on how you can save extra money for a new car.
Don’t just budget, have your money working for you
If you’ve already narrowed down the selection of your next car to a shortlist, make sure you follow that up by analysing prices. You can start by using our service to see what other motorists paid for the same car that you’re interested in. After that, begin to prepare a budget based on the anticipated expenses you would expect to incur in meeting the loan repayments for the car.
While most new car buyers would already do this as part of their due diligence, putting aside that money is not enough. Instead, you should have it ‘working’ for you. As such, you might want to consider looking into high-interest saving accounts, term deposits, or if you have some contingency within your budget, perhaps even shares.
Look to the secondary market
The second-hand market can offer motorists some great bargains, however, there is an element of increased risk when buying from an unknown third party. Instead, consider ex demonstrator vehicles, which are often practically brand new and come with a generous discount compared with the RRP. This will keep more money in your back pocket, rather than the dealer’s.
When it’s time to part ways with your existing car, more often than not it pays to avoid trade-ins, where your negotiating position is compromised. Sure, some dealers can help you step into a car at a fair price, but you’ll lose scope to negotiate on the actual retail price of the car you are buying. To save some extra money, you could sell your car on the second-hand market, provided it’s not an urgent sale.
Manage car-related expenses
One of the things that puts off new car buyers are the associated costs that come with a vehicle. On the face of it, you might be able to afford the actual car, however, the ongoing operating costs might be what force you towards a loan, which in turn then introduces additional costs (interest expenses).
If this sounds like you, have a look into whether you can pay your insurance and registration on a more frequent basis. Yes, this will likely cost you more, however, it might help you manage your cash flow to afford the car to begin with. Alternatively, balloon payments may reduce the size of the loan you pay down, thus freeing your cash initially and over the useful life of the car.
Last but not least, you might think a 0% finance deal will help you save extra money for a new car, but you could actually cost yourself more. Don’t forget, dealers need to make up their margins somewhere, so it’s much more likely you’ll lose your negotiating power over the vehicle price.