When you think about your dream car, you are probably focusing on things like horsepower, paint finish and leather seats – not to mention sound systems and all the other modern technologies that make driving dreamy. But if you are serious about getting your dream car one day then you should consider a more practical approach.
While math probably isn’t your daydream of choice, working out the numbers will give you a good idea of how to make your dream come true. Whether you are after something like the Porsche Project Gold 911 Turbo Coupe or something a little more down to earth, doing the math will give you a time frame for earning enough to afford the dream (or assure you that a dream is all it will ever be!).
Taking a Car Loan (and Paying it Off)
If you are determined to get your dream car as fast as possible, a car loan is probably going to appeal to you. This will give you the car you want straightaway in exchange for monthly payments but it should be noted that car loans are more expensive over time due to the added interest.
Before you take out a car loan, you must make sure that you can afford the monthly payments without stretching yourself too far. Missing a payment simply isn’t worth thinking about but overpaying your loan should certainly be part of your plan. Overpaying your loan will minimize the amount of interest you end up paying and reduce the financial pressure each month. Have a look at AutoGravity for different methods to pay off a car loan early.
Saving Up
Though a loan can be tempting in the short run, if you are willing to wait, saving up is really the best option. Saving up essentially means that you will avoid having to pay interest and you won’t have any ongoing monthly payments to make.
The most effective way to save is to create a savings plan. This means working out how much you need to save each month and then balancing this number with how much you can save.
Start with the cost of the dream car – let’s say for simplicity’s sake that this is $10,000. Now decide how much you are able to save each month – let’s say $500. With this scheme, you would be able to save the full amount in 20 months (10,000 divided by 500 = 20). Now you have the formula, you can play about with the numbers to reduce the time it takes or the amount you save each month.
Automating your savings by setting up a direct debit from your bank account into savings is the quickest and easiest way to make sure that you save the right amount each month. But there are other things you can do too – sell off your junk online to make a little extra, put any windfalls into your savings account or even take on another part-time job to earn a little extra.
Working Out Ongoing Costs
Paying for the car is only part of the cost. You should also work out how much the car will cost to run and how much your insurance will be. The idea that you might have saved for years only to end up with a car that has to stay in the garage is heartbreaking so knowing what the likely gas consumption and insurance costs will be is vital.
Many car manufacturers will give you a rough estimate of gas consumption per 100 miles but if not, then you can calculate this yourself with the right numbers. This is important to know because if you plan to drive this car regularly, you should be aware of how much it will cost to do so. Remember that cars with larger engines tend to burn through a lot more gas than more efficient models such as hybrids.
Car insurance is another major cost you must consider. If you can’t afford the insurance, you can’t afford to drive the car! Again, working out your car insurance cost is quite simple and you can also request car insurance quotes to get an idea of cost before you buy.
Though for some people doing all this math will only confirm that the dream car will remain a dream, for others, this kind of math might just show that you are only a couple of years away from owning the dream. Whatever the result, a little practicality goes a long way!
