One of the main savings goals for many Spaniards is to buy a car. A basic item for getting around the country, going to work or even travelling. The following tips will help you improve your personal finances and buy the car of your dreams.
6 tips to help you save money and buy the car of your dreams
If you want to save to buy a car, follow these tips:
1. Prepare an income and expense budget
Savings is a mathematical equation that is calculated as the difference between income and expenses. For this reason, to save more money it is necessary to increase the former or reduce the latter.
To control your expenses, make a budget that includes all your family and personal expenses, differentiating between fixed and variable expenses. This way, you will adjust your budget as much as possible, reducing unnecessary expenses and improving your savings level. In addition, thanks to this budget, you will be aware of your financial capacity.
It would also be advisable to buy the car once you have the final amount indicated by the dealer. This way, you will avoid paying the interest on a loan, which is usually around 6 or 8%.
2. Set savings goals
Most financial institutions have a tool that anyone can use to set their savings goals, that is, set a specific amount and deadline. On the other hand, remember to set a feasible goal within a reasonable time, whether it is to pay for the car in cash or to put down the down payment.
It’s worth noting that a good savings goal is to not live beyond your means. In other words, your dream car is probably exceptional, however, it may not be within your reach. If this is the case, opt for a lower-end car or keep saving.
3. Save at the beginning of the month
Pre-saving is a very useful technique when saving to buy a car. It consists of setting aside a portion of money at the beginning of each month, just when you receive your paycheck. Experts recommend that this amount should be at least 20% of the worker’s income. For example, if you earn €2,000 a month, you should allocate around €400 to pre-saving.
This technique works best if you make automatic transfers to a different checking (or savings) account.
4. Deposit your money in savings accounts
Savings accounts and interest-bearing accounts can help you not only achieve the above point but also earn interest on the money you save. At Raisin, you can choose from a wide variety of savings accounts from European banks that offer up to 3.31% APR. With this savings product, funds are available almost immediately, so you can withdraw your money when the time comes to buy a car.
5. Invest your money in fixed-term deposits
Achieving a goal such as buying a car by saving is not so easy. For this reason, many experts recommend seeking a return with savings products. Bank term deposits are a low-risk option to make a profit with your money. Like savings accounts, they have a risk indicator of 1 out of 6 and up to 100,000 euros per client and banks are protected by the National Deposit Guarantee Fund. At Raisin, you can access deposits from European banks with up to 3.65% APR.
6. Take advantage of government subsidies
The Spanish government offers various aid schemes for the purchase of new cars in its attempt to renew Spain’s ageing car fleet. However, these state aids vary depending on the autonomous community in which you live and the car model chosen. Therefore, before buying a car, check if you meet the necessary requirements. You can also get aid and tax benefits if you buy an electric vehicle.
How much money is recommended to spend to buy a car?
It is advisable not to spend more money than you have when buying a car. The best option would be to buy a car that you can afford, that is, save enough money to buy the vehicle you have in mind. If this is not possible, do not forget that loans have interest, so it is not advisable to go into too much debt.
If you decide to take out a loan, keep in mind that repayment of the loan plus interest could take a good chunk out of your monthly income. Therefore, take into account your fixed and variable expenses when applying for credit.
