Most American households do not effectively save money which leaves them susceptible to multiple financial problems in the future. Not having any savings or emergency funds can be a problem in a several situations. Think about attempting to buy a car: it is very difficult to buy a car without having cash on hand. Here’s why you need to save before buying a vehicle.
Your down payment reduces the overall cost that you pay to a dealer. Most dealers expect buyers to put forth at least 10 percent of the car’s value as a down payment. If you have a questionable credit history, a dealer will expect an even higher down payment. If you are buying a $20,000 vehicle and have a decent credit score, you will need at least $2,000 to even think about making the purchase – and that doesn’t include a few extra expenses that most people do not take into account.
Title Fees, Taxes, Registration, and Insurance
What many do not consider when buying a vehicle are the other associated items that must be purchased as well. Buyers will pay sales tax on the car. There are also title and registration fees to pay to the state department of motor vehicles. You cannot forget about auto insurance either. In most states, you cannot purchase a vehicle without proving that you have auto insurance. Depending on how you choose to pay for insurance, you will need several hundred dollars to cover these expenses.
Once you make your purchase, your car expenses are not limited just to your car payment. You need to put gas in your car and you should schedule preventative maintenance to ensure its performance. Oil and oil filter changes every 3,000 to 5,000 miles will help extend the life of your engine. Tires will wear out and need to be replaced. Brake pads and rotors will need to be replaced as will a variety of other parts and fluids. All of these items cost money.
If you are planning on buying a car, get prepared by saving money first. Ideally, you should save your money and pay cash for a vehicle. Save the amount of a car payment each month until you have enough to make the purchase. Having a vehicle that is completely paid for has its advantages. If you are ever in a financial bind, you can always use the vehicle as collateral for a car title loan. Embassy Loans, one of the Florida’s leading consumer finance companies, has helped thousands of customers achieve their financial goals.