Many of us, especially those who live far from public transport, need a car to get around. Even if you choose a practical vehicle for your daily commute, errands and trips, you probably dream of a fun, sporty and luxurious car. But how can these dreams become a reality? Owning a supercar is often a lifelong ambition that can seem unattainable. Either way, buying a supercar can be very expensive due to the high upfront cost and the ongoing servicing, maintenance, and running costs. But don’t worry, there are financing options that will allow you to make your dream a reality. Here are some ways to finance and save for a luxury car.
Set Your Sights on a Car
The first step to saving money is always to set a goal. Think about the type of vehicle you want to buy and start researching prices. It’s best to have a good idea of how much you’ll pay for your car. Luxury cars can cost between $50,000 and $100,000, so be specific in your search: know the make, model, year, interior, exterior and accessories. If you want to buy an exotic car, the price is even higher, so be prepared to be shocked.
Plan Your Financing Options
Once you know how much your supercar will cost, it’s time to think about financing options. For cheaper luxury cars, it’s relatively easy to get a car loan. The interest rate depends on factors such as creditworthiness, loan term and down payment amount. Many banks and lenders offer pre-approval that doesn’t require a thorough credit check, so you can see and review the loan details without affecting your credit rating. Some things to consider when it comes to car loans:
- A longer-term means lower monthly payments, but that usually means a higher interest rate and a higher total cost over time.
- As determined by your monthly debt ratio, your credit history and ability to repay are crucial in getting approved for a loan.
- A higher down payment means lower interest rates and lower monthly payments.
For exotic vehicles, in particular, your credit score should be the highest, and you should expect a down payment of around 20%. Many exotic car lenders will also want to see details of your credit history for 50% of the amount requested.
If you’re not sure you want to own your dream car or you’re worried about wear and tear, consider leasing. Most vehicles are leased for 24-48 months. You pay monthly fees, and when the lease expires, you can choose to repurchase the car or return it. The benefits of leasing are:
- Costs for routine maintenance and repairs are included.
- You have not acquired an asset that will depreciate.
- At the end of the lease period, you have the option to trade in the car for a newer one.
- Lower down payment or no down payment
Ultimately, every person and every car is different, and it’s up to you whether you want to lease or buy your dream car.
Save up for Your Dream Car
Whether you buy or lease a car, you need to budget and save before taking it home. First, calculate how much you’ll need to pay for the purchase. Costs may include down payment, taxes, title and registration. By thinking through these costs, you can set an initial savings goal. Then calculate the estimated monthly cost of owning (or leasing) the vehicle to see if it really fits your budget. Typical car costs are:
- Loan or lease payments
- Maintenance and repairs
- Insurance payments
- Registration and inspection fees
- Fuel, tolls and parking
- Towing and emergency assistance
- Cleaning and maintenance
Buying your dream car is a great goal that’s probably more realistic than you think. Even after you’ve bought a car, it’s a good idea to set up a savings account to cover any emergency repairs. If you have any questions about luxury car finance and savings, the experts at Grange Finance Australia can help you through the entire process.