Since getting a car, whether new or used, is a major purchase, it makes sense to anticipate the financial outlay well in advance by setting funds aside. If you have a plan of attack, you can either put away enough money for a down payment on a vehicle, or even amass enough cash to purchase a car outright with no financing. I was so determined to pay cash for my next set of wheels that when I purchased my current car in April of 2017 after the 24-month lease ended, I began saving up for the next car by earmarking contributions in a specially designated car fund. I now have enough set aside to purchase a moderately priced new or gently used vehicle when the time comes. Granted, I was extremely aggressive and determined when I began saving up, but I now know that it is indeed possible to self-finance a car purchase.
Even if you can’t save up enough money for a cash purchase, a chunk of change could nicely cover a down payment, thus lowering the total amount which ends up being financed. I ended up intuitively setting up a high yield savings account and have been making monthly investments for the past five years, a technique which is actually recommended by financial experts. The other thing I kept in mind when figuring out how much to set aside each month was the value of the vehicle which I would most likely purchase in the future. When I got any additional small windfalls, I would add those monies to the fund. Lastly, another thing which I made sure to do was to set up a car repairs fund in high yield savings so that I would be prepared if I ran into any unexpected repair bills on my current ride.
For more detailed information on whether to buy new or used, or to buy versus lease (though I NEVER advise anyone to lease a vehicle), you can check out this article: