So you’ve got your eyes on a brand new 600 horsepower supercar, but the price tag seems way out of reach. The truth is, you don’t need to be super rich to own a fancy car, you just have to be smart. With intelligent saving and new loan options, the average worker is able to acquire their perfect vehicle. Once you’ve set your sights on that dream car, here’s how you can make it into a reality.
Okay, so we’re talking about dream cars here, but you’re not going to be able to afford a million dollar supercar on minimum wage. There are plenty of high performing, affordable cars, but it is also okay to aim high. There is likely a mid range BMW or Mercedes that might seem out of reach now, but could one day be yours. The important point is to pick a car, so that you have a goal you can work towards.
Start Putting Money Aside
Once you know how much your dream car costs, you need to set up a dedicated savings account. Whether this is money to buy a car outright or to put aside to pay back a loan, make sure you have the funds available.
The average car depreciates by 19% after a year. You should therefore aim to pay at least 20% of the price up front to avoid owing more than your car is worth. With the average salary in South Africa at $60,000, many people should be able to save at least a grand a month and will quickly be able to afford 20% of a fine motor.
So you’ve saved all you can, but for top end cars you’re going to need a loan. In order to find the best auto loan rates, shop around online comparison sites. Think of it like anything else, you want the best price. Most experts don’t recommend a loan that lasts longer than five years. The longer the loan goes on, the more expensive it will be. This is not just because of interest but also because you will have to meet insurance requirements for longer, pushing up the price.
There are increasing numbers of car loans making dreams a reality for many petrol heads. However, some of these can carry quite large risks. Once you’ve found the car of your dream, be frugal in your spending so you can set aside at least 20% of its cost up front. After that, find the best loan rate you can, but keep it short and pay it off quickly. Then you can rest easy knowing you own the car of your dreams.