If someone gave you a lump sum to buy your dream car, which car would it be? For many drivers, their dream car will seem like exactly that – a dream in which they could not achieve. But for others, their dream car may be more achievable than they think. Whichever type of car you’re interested in buying, you may be wondering how to make your dreams into a reality. Our 6-step guide below looks at how to breakdown the cost and excel your savings fund to reach your ultimate goal.
Know how much you need to save.
The first thing you need to do is set a savings target. You can do this by researching the current market value of your dream car and seeing how much you may need to have saved up. You may even find your dream car is way more expensive than you originally thought and your dream car aspirations may be knocked down a peg or two. But, if you’re serious about buying your dream car, you’ll need to know how much it’s going to cost you.
Get serious about saving.
Once you know what your savings goal is, it’s time to put a plan together. First, take a look at your current income and minus any essential bills or payments e.g. rent, mortgage, food, utility bills etc. This can then be a good time to review your current spending and see if you can free up any money to put towards your savings goal. Things like a streaming service subscription, a gym membership and your daily coffee could all be cancelled if you want to boost your affordability. Work out how much disposable income you have now and then you can focus on how much you could realistically put in your savings account each month.
Pay down any debt you have.
It can be hard to look towards taking on any more credit or increase your savings when you have debt holding you back. Not only can debt limit how much disposable income you have but it also impacts your credit score too. If you have high levels of credit card or store card debt, it can be a good idea to make more than the monthly payment each month and try to pay off the balance as soon as possible.
Check if you could get finance.
Car finance is a way for drivers to spread the cost of their dream car into affordable payments instead of having to fork out one large lump sum. In recent years, it has become more accessible for people to get a car on finance even if you are on benefit income, have a low credit score or if you’ve never had any credit in the past. However, you will still need to meet the lenders criteria first before you are able to get finance. Spreading the cost of the loan could make your dream car a reality and pay for it over a term that’s right for you.
Improve your credit score.
Your credit score is often checked when you apply for car finance because lenders want to know the likelihood of you paying your loan back on time. A good or excellent credit score could help you get approved more easily and helps you to save on car finance interest rates too. Finance lenders reward higher scoring customers with lower interest rates, and it can help to make your finance deal cheaper. By reducing your debt, making any payments on time and in full, only using credit little and often and having a mix of good credit can all help to quickly improve a low credit score.
Check insurance rates before committing.
In the UK, it is a legal requirement for every vehicle driven on the roads to have a valid insurance policy in place. It can be worth getting insurance quotes for your dream car to see how much ownership would cost you. The purchase price of a car can affect its insurance costs as some parts may cost more to fix if the car was involved in an accident. However, other personal factors such as how long you’ve been driving can also affect your rates and newly qualified drivers will see some of the highest insurance rates offered.
