A car is the biggest expense most people have in their life besides their home. A new car costs anywhere from twenty to seventy thousand dollars, which is more than many people’s salaries. It makes complete sense that people might struggle to purchase a reliable car. For many people who need a decent car, especially those who drive for work, a rental is the only way to get around. Eventually it will be time to transition from an expensive rental to a car of your own. Here are some easy steps to get you there.
Start Saving
Whether you want to pay cash or purchase with a loan, you will need money set aside. Cash purchases obviously will require a large amount of available cash, but credit purchases will also require something down to start. Begin a small savings to get the ball rolling. Some easy ways to do this:
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Round up purchases to the next dollar. Many banks are set up to do this automatically. This seems small, but can add up quickly. Even if this only equals five dollars per day, that is $150 a month on average!
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Set aside a specific amount each payday. The average american spends their checking account down to the same point every month (for many people, that point is zero). The best way to set aside money is to pay yourself first, so if you want to save $200 a month, and you get paid biweekly, just set aside $100 per check before you spend anything.
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Skip the extras. While you are still renting a car, that rental fee is money you don’t have for savings to buy. The only way to pay for both is to sacrifice your extra expenses for a while. This might mean skipping your morning coffee and breakfast, and opting to brew a cup at home to enjoy with your cereal. It could mean shopping less. You know your expenses best, so just look for the things that you can shave in the short term.
Work on Your Credit
If you plan to get a loan, this is obvious, but even cash buyers should try to have good credit. Your credit rating can affect your insurance rates dramatically, even if you are a fantastic driver. While you are building your savings, there are things you can do to improve your credit score dramatically.
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Check your score, protest inaccuracies. This might seem obvious, but checking your score should be the first thing you do. It is possible for inaccuracies to kill your score, whether it is old bad debt that should have fallen off after seven years and did not, or false reports from divorce or identity theft. A quick protest through the credit bureaus online portal can add several points at a time to your score.
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Pay down balances. This might be difficult while saving, but eliminating small balances can make a large impact on your overall credit profile, especially if you are behind on those payments.
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Have someone add you as a signer on their credit cards (if they are good about paying for them). This can quickly add points to your score by improving your payment history, and they don’t even have to give you a card.
Shop For Deals
When the time comes to buy, dealerships might not be your best option. You can often save a lot of money by purchasing from a private party or by finding repos at auction. These will typically need some work to get the best deals available, but if you are willing to take on repairs, you can often get deep discounts. You can get rebuilt parts from junkyards online, and it is even possible to find rent to own wheels to upgrade the look of your car without a huge starting investment.
The most important part of making a transition from renting to owning a car is to do something. Start making changes to position yourself for that purchase when the time comes. Set aside the money you need, fix your credit, and start looking for the perfect value when you are ready to buy!
