Did you know that 44% of people think that they will never be able to afford their dream car? Whether it is an expensive luxury brand, a race car, or some other type of vehicle, you may think that your dream car is out of your price range.
Would you like to learn how to buy your dream car and turn your fantasy into a reality? Here are some tips on how to purchase the car of your dreams, and not break the bank in other parts of your life.
Decide on the Make and Model
Do you have a specific car in mind that you knew you wanted since you were a child? There are many types of vehicles that people consider to be their dream cars. Before you go car shopping, do your research and decide which type of car you desire most, but that also fits your needs.
If you are still unsure, you can visit car dealerships and test drive vehicles that you’re interested in. This can help you narrow it down to your top options. For example, if you try out a classic car with a stick shift, you may decide that you want an automatic transmission.
Classic Vintage Cars
If you were always fascinated by vintage cars, then you should try to get one that fits the era you want to live in. Classic cars allow you to have a truly unique driving experience in a time where many cars look the same.
Classic cars require lots of care and maintenance because parts can be difficult to find and expensive. For a fun new hobby as well as a vehicle, a classic car may be the best pick for you.
Modern Luxury Brands
If you simply want to drive in style without much hassle, then you should think about buying a premium luxury car. These vehicles usually have features like leather seats, up-to-date technology, and a smooth driving experience.
Overall, luxury vehicles tend to perform better than their less expensive counterparts. Although the car is an investment, you may actually save quite a bit of money in the long run with less maintenance and fewer replacement parts.
Do you enjoy camping and hiking in your spare time? Then your dream car may be a vehicle that can easily go off-road and hold its own on all types of terrain.
The best cars for these activities include Jeeps and trucks. They also have plenty of room for you to store emergency supplies and all of the camping and outdoorsy equipment you will need.
Did you enjoy watching NASCAR races as a kid? If so, then your dream car is no doubt something that goes very fast in a short amount of time. As an adult, you can make your dreams come true with a race car of your very own.
Race cars tend to be very expensive, so you may need to save up for a while. Remember, you should always follow traffic laws and speed limits, even if you have a car that can far exceed them. Save the real racing for when it’s safe and appropriate.
Evaluate Your Financial Situation
Once you decide on the type of car you want to buy, you need to thoroughly evaluate your finances and how you can pay for the vehicle. The last thing you want is to get the car of your dreams, only to not be able to afford it.
When you make a big purchase, you need to examine every aspect of your finances, from your credit score to how much income you bring in every single month. Since a large chunk of money will be coming out to pay for the car, it is vital that you make room in your budget.
Raise Your Credit Score
If you want to purchase a car but need money upfront, then you should first focus on your credit score. For people with credit scores in the good to excellent range, it is easy to get a loan with a lower interest rate. This can save you hundreds of thousands of dollars in additional payments.
An easy way to boost your credit score is by getting a starter credit card or a prepaid credit card. You can spend only the money that you have, pay it off every month, and your credit report will reflect responsible payments. Once you feel confident in your credit score, you can start researching financing for your vehicle.
Look Into Financing Options
More often than not, your dream car will be out of your price range to buy with cash. This is where financing comes into play. Just like any other loan, you need to shop around for the option that works best for your wallet and your credit score.
If you are new to financing, try asking your bank or credit union about low options. They usually have better rates if you have been a member for a long time. Ask what their loan requirements and credit score preferences are before you fill out a loan application.
You can also compare rates with easy auto financing online. By doing a simple internet search, you will find a variety of lenders that offer competitive rates to suit your needs. You can usually fill out an application online and find out quickly if you got approved or not.
Remember, when you apply for a loan, try to have a down payment ready to go. This will show the lender that you are trustworthy and you know how to manage money.
To calculate the total loan amount, add up the estimated price of the vehicle, sales tax, and any other fees you may accrue through registering it with your local DMV. That way, you will not have to take more money out of your own pocket during the process.
Calculate Unforeseen Expenses
One of the most important sinking funds you can have is for unforeseen car repairs. The last thing you need is to not be able to drive your car because you can’t afford to fix it.
Ideally, you should have at least a few thousand dollars in a savings account in case of any car damage. Do not rely entirely on your insurance to pay out claims.
If your dream car is rare, vintage, or simply requires luxury parts, then it may be a pretty penny if you eventually need to replace something. Do your research beforehand and estimate the average cost of labor and materials for your make and model.
Gas can also come into play as an unexpected expense. If gas prices go up in your area, you should be prepared to pay extra for your basic needs, such as getting to and from work. Make sure to put aside gas money if you plan on taking a long road trip as well.
Estimate Your Monthly Car Payment
Although a price tag on a car may seem like a good deal, you won’t know until you can accurately calculate your monthly payment. Simply add the car price and other expenses, then divide by the number of payments you will make.
If you want more detail, you can easily run an amortization schedule online to see what your monthly car payment will be. These schedules will also break down the amount you’ll pay every month in interest and in principal.
You may find room in your budget to pay off your car even faster. Using a loan calculator, you can run a variety of test scenarios to see which type of payment works best for your needs and budget.
Research Leasing a Vehicle
Sometimes you may want to get the luxury car experience before you make a commitment to purchasing it. Leasing is a great option where you can essentially rent a car for a designated amount of time. Sometimes the company will offer it to you for a discounted rate after your lease is up.
Similar to traditional auto loans, leasing often requires a down payment. Review your leasing contract carefully. If you don’t understand some of the terminologies, it may be well worth your time to go over it with an attorney so you do not get taken advantage of.
Make sure you understand how much you’ll pay every month, the term limit for the lease, and the mileage limit. Then you can make an informed decision on whether to lease the car of your dreams or wait to buy it with a car loan.
Consider Another Stream of Income
Sometimes a second stream of income can provide you with the extra that you need to afford the car of your dreams. Consider picking up a gig job, like driving people, food delivery, or shopping. That way, you can set your own hours and make as much or as little as you’d like.
If your budget already stretches too thin, then try to make a goal with your second stream of income. For example, once you calculate your monthly car payment, you can aim to make just over that much every month. Then you won’t have to dip into your regular budget to afford to buy a dream car.
Know Your Insurance Policy
If your dream car is on the expensive side, then chances are, your monthly car insurance rate will go up. You should talk to your insurance provider to see if you can get an estimate on the new rate, so you can factor it into your monthly budget.
You may also consider a stronger insurance policy on your vehicle. If you want your dream car to be covered as much as possible, then paying a bit more out of pocket for the best policy may well be worth it if you get into a car accident.
For small dings and scratches, you may be better off paying for the damage yourself rather than filing a claim with your insurance company. By not filing a claim, your insurance premiums won’t go up drastically and you can still save money.
Dream Car Maintenance
When you buy your dream car, you need to maintain it regularly. You should always know the price for visiting the mechanic, smogging it, and paying for registration every year. That way, you can factor them into the budget that you have for your vehicle.
Before purchasing your car, look up some of the most common problems and solutions. You can often find guides on how to fix these issues yourself. Plan ahead and buy the tools, spare parts, or other items you will need in case the issue happens to your car.
Maintaining your vehicle will help it to last longer and save you more money in the long run. Clean it at least once a month, professionally if you can afford it. Often, drive-through car washes don’t do a great job of getting all of the dirt and grime off of the exterior.
Get Your Dream Car Today
You should not have to fantasize about your dream car without a chance of it becoming a reality. With these tips for how to afford a dream car, you can certainly buy the car of your dreams and drive it to your heart’s content.
Would you like to learn more about managing your money and affording things you never thought you could? Check out our site for more tips, tricks, and inspiration for budgeting to fit your lifestyle.