Buying your first car is a big milestone and one that people come to at many different stages of life. Some are fortunate enough to be assisted by parents or loved ones, others have to buy their first vehicle without the support of anyone else – which can actually be more rewarding. If you’re looking to buy your first car, in this article we explore why buying with cash is typically better than finance, and give you some handy tips to make your savings journey a little easier.
The case for buying with cash, not credit
Many first-time car buyers are tempted into the allure of a new car and often fall into the trap of buying their first car on finance. While finance isn’t the worst option in certain circumstances, it’s a good idea to think about buying second-hand and paying in cash for your first car.
First of all, new cars can lose about 30% of their value in the first year, which can be a hefty loss to stomach. Second-hand cars depreciate much less and often offer better value for first-time buyers – so long as you buy a well-maintained and well-priced vehicle.
Secondly, paying with cash instead of relying on credit or car finance is a good option to avoid you locking yourself into a debt agreement for years to come. This can tie up your disposable income and heighten your money stress over repayments. So, if you’re on board with saving for your first car, here are some tips to help you with the process:
Open a dedicated savings account
To give yourself a clear vision when it comes to saving, it can help to have a dedicated savings account set up for you to track your progress. A regular savings account will do the trick, allowing you to withdraw money if you need it for any other reason. These can usually be set up quickly online and opened with a small initial deposit.
Save consistently and gradually
Saving is best achieved when it’s done gradually and consistently. Putting money aside every month will allow you to march on towards your goal whilst not putting your wider financial situation in jeopardy. If you want to reach your savings goal quicker then you can always increase your contributions or look for creative ways to earn more on the side of your main income (as we discuss below).
Save when you get paid
Following on from the last point, prioritise saving first when you get paid to make it easier to put aside a lump sum. Chancing your ability to save at the end of the month rarely works because there are always other ways to spend your money throughout the month. Save first and you should reach your goal more reliably.
Try a savings challenge
If you’re struggling to achieve your savings goals then turn it into a bit of a challenge or game. There are many savings challenges you can find online or just create your own savings challenges with friends and family. It always helps to include someone else because they can help you to stay on course.
Be creative with earning extra money
If you’re struggling to put aside enough from your disposable income then get creative with ways you can increase it. Look to sell things that you don’t want or use anymore, work a little extra or see if you can start some side hustles to generate some more cash for yourself. Again, there are lots of resources to call upon online if you want inspiration. Best of luck!