Saving money for a car doesn’t need to be difficult. We’ve put together a quick guide for the best way to save for a car.
Budgeting
Knowing how to save money for a car starts with good planning. You need to be aware of the different fees and costs of buying a car, including:
- Initial deposit - lenders will usually require a down payment of at least 20% of the value of the vehicle and a larger deposit will reduce the interest you owe as well as the size of monthly repayments
- Lending Fees - many lenders charge various ongoing monthly and annual fees for car loans (see the section on car loans below)
- Insurance Premiums - you’ll need to factor in annual insurance premiums on top of the price of the car, and on top of loan repayments
- Running costs - fuel and maintenance costs have a lot to do with the age and type of car you want to buy
- Taxes - you will also need to pay registration fees for your car each year
- Selling/trading current car - you should offset the cost of your new car by maximising on the sale or trade of your current car, if you have one
How to save up for a car
If you already have some cash saved but it’s not enough, you want to make sure you are keeping it somewhere that is giving you maximum interest. That means shopping around for good savings accounts or term deposits.
Check out Greater Bank’s Life Saver Account, which rewards good saving practices for under 25’s with a high-interest rate. All you need to do is make sure your balance grows each month, and you can even link your transactional account.
You can also look at a Term Deposit. A term deposit means you give a certain amount of money to a bank for a fixed period at a fixed rate and you are paid interest at the end of that fixed term. Check out Greater Bank’s current Interest Rates here.
Car Loans
A good car loan can be a really cost-effective way of getting a car sooner. If you’re taking out a car loan it’s important to put down the largest initial deposit you can. A larger initial deposit is first and foremost going to help you save on interest since you will be paying interest on a smaller outstanding loan amount. A larger deposit will also reduce the size of your required minimum repayments. | Greater Bank
Make sure you speak to your lender to calculate an ideal initial deposit amount. Further, making a larger initial deposit is going to put you in a much better position with dealerships so you can get the best deal possible.
Greater Bank offers a really straightforward New Car Loan with a competitive interest rate and no monthly or annual fees. The loan can be approved in just 24 hours, making it super simple. You can also make early loan repayments without any penalties or fees, which means you can knock off the loan quicker and reduce interest. The loan also comes with flexible repayment options, with repayment schemes of 1 to 7 years.
This article is intended to provide general information of an educational nature only. This information has been prepared without taking into account your objectives, financial situation or needs. Therefore, before acting on this information, you should consider its appropriateness having regard to these matters and the product terms and conditions. Terms, conditions, fees, charges and credit criteria apply. Information in this article is current as at the date of publication.