Teenagers want their own cars. They always seek the freedom of driving wherever they want to go whenever they wish to do so. That sounds easier said than done, as cars are very expensive (even for adults) and can take a while to save. It’s not also a single payment – you have to pay for insurance, maintenance and gas expenses. With the proper saving attitude and knowing what to expect, you can make this an easy and fulfilling experience. Here are some tips you can do on your own to save for your car.
A lot of teenagers make the mistake of saving for their car a few months or a year before they are able to drive. If you are thinking in the same manner, you could be wasting precious time and money right now. It’s very difficult to save up on a car down payment in a single year of part-time jobs even with the help of your allowance.
If the legal driving age in your country is 16, start saving when you’re 11 or 12. It sounds too early, but you have a long way to go and you don’t have many resources to use. This way you won’t feel pressured when you are already near the driving age and you end up settling for a cheap car.
Create a Savings Account
Even if you’re still young, you can already open one. In some banks, you might need to bring your parent or guardian for their consent, or you can even open an account together with your parent. What’s important is that you will be the one to manage your savings account and you have a safe place to store your money.
Storing your money in a bank can be a bit troublesome and embarrassing. Since you don’t earn a lot, it can be too awkward for many teenagers to deposit just a few hundred dollars each visit. Keep in mind that if you bring your cash with you at all times or store it at an accessible place, it’s very easy to give in to temptation and spend it.
If it’s too much for you to go to the bank and deposit your money on a weekly basis (which you should), then you can enlist the help of your parent. Make arrangements wherein you simply give them the money you earned or saved and they transfer the equivalent to your savings account through wire transfer or online banking. This way you won’t have to wait in queue, and you still put something in your account regularly.
Formulate a Budget
The word budget seems like it’s a very serious word only for adults. If you’re planning to save up on a major expense like a car, then this is definitely something you should practice. Read up on free resources on the internet or in your local library. You can even copy some budget plans made by others.
The important thing about creating a budget is you’ll be able to see where your money is going and how much you can save each month. You’ll have a realistic timeline when you can save for your car and you can easily reduce your expenses using a budget. A budget allows you to see where your expenses are and you can view if it’s a reasonable expense or if you can reduce it even further.
Shop Around for Rates
Just because you’re a teenager doesn’t mean that you can’t ask around and compare prices. You need to include that in your budget, to know when you’ve reached your goal and to manage our budget accordingly. It’s not just the car price you have to compare, there’s also the insurance rate. A lot of insurance companies have different rates for teenage drivers and have varying prices. Include this in your comparisons. You have some time with you so visit and compare a lot of car and insurance companies.
Maximize Your Discounts
Being a teenage driver will have some perks. You can avail of some discounts that can make your down payment easier on your budget. Some of the requirements for these price cuts are pretty basic so you can do them easily. Here are some ways you can get discounts.
- Take a driver safety education course. It’s important before you get a learner’s permit and if you show it to a car dealership or insurance company, they’ll be happy to slash the price for you. The reason for this is because they don’t want you to damage the car easily. This translates to lesser expenses for them and lower price for you.
- Maintain a “B” average on your grades. A lot of teenagers don’t think their grades are related to car purchases, but it is. Car dealers want to make sure that the person driving behind the wheel is a responsible person. The only way they can make sure of this for teenagers is to look at school performance. This is another good motivation for you to study hard: lower car down payment.
These methods are very basic and achievable. Take advantage of these and make sure you present this information when you ask for the car down payment or car insurance price.
Select a Car Wisely
You should choose a car that has a good safety rating and has a good mileage, especially for teenagers. Be realistic in choosing your car model; don’t immediately go for a sports car or an expensive model. Dealers and insurance companies are very hesitant to put an inexperienced driver behind luxurious cars.
If your car is a bit “generic” or “boring”, then it’s also less prone to vandalism or theft, making insurance premiums a bit lower. Remember that it’ll be your first car so consider it as a practice vehicle while you’re still getting the hang of maintenance and repairing car problems.
Set Your Goals
As soon as you set your sights on a specific car model and price, formulate your goals accordingly. A good measure is to pay off at least 20% in the down payment. Paying a huge chunk in terms of down payment will mean that you’ll pay less in your monthly payments. This will make it reasonable for you and you won’t have to struggle with your budget for the next 2 years.
After you make your payment, your budget and goals don’t stop there. Your monthly payments are still there and you need to deal with them smartly. When you’re working out the payment terms with the car dealership, choose to make the payments within 48 months. You’ll avoid paying a lot in interest rates and if you choose to resell your car at that time, its value won’t be too low.
With the examples we’ve given, it shows that a teenager can save for a car. It just takes determination (for a couple of years) and smart managing of your money. If you get frustrated or feel like giving up, remind yourself that this is just a practice run for budgeting and saving. When you’re on your own, you’ll deal with bigger purchases like a house or something like that.