Demystifying Deposits: How much do you need to save before buying a new car?
Picture this: you’re cruising down the scenic coastal roads of Australia with the wind in your hair and the sun kissing your skin while your favourite tunes are singing through the radio.
Sounds perfect, right?
More than just a mode of transportation, a car is a real ticket to freedom, pride, comfort and adventure. However, the journey of hitting the open road always begins with navigating the financial side of car ownership, starting with saving for a car deposit.
In this quick car deposit guide, we’ll explore what a car deposit is, how much you typically need to save and share some reminders for when you’re putting down a deposit for your dream car.
What is a car deposit?
A car deposit is a lump sum of money that you pay upfront when buying or leasing a car. It’s a demonstration of your commitment to buying the car and is often required by dealerships and lenders.
Essentially, it serves as your initial investment in the vehicle, while the remaining cost will be completed through your choice of car financing method.
So, how much do you need to save for a car deposit?
The amount of the car deposit can vary, depending on several factors including:
- car price,
- lender’s policies and
- your credit score
Some lenders require a fixed percentage while others can be more flexible. A good credit score can also help with negotiating the initial deposit or even help you qualify for a no-deposit option.
Typically, car deposits can range from 10% to 20% of the vehicle’s purchase price. According to a Canstar Blue survey, the average spend for cars in Australia is $40,000. This means that the usual range of car deposits is around $4,000 to $8,000, depending on the factors mentioned above.
3 Tips to help you save for your initial car deposit
Saving for your dream car might seem daunting at first, but with some careful planning and discipline, you can reach your goal sooner than you think. Here’s how:
-
Set a clear goal.
Start by determining how much you need for your car deposit. This involves considering your dream car and doing your research. With a specific target, it’s far easier to stay motivated. -
Open a dedicated ‘car deposit’ savings account.
Consider opening a separate savings account for your car deposit. This way, you can easily track your progress and avoid being tempted to use the savings for other expenses. -
Stay disciplined.
Because a car is a big investment, remember that patience and discipline are required. Try to stay focused on your goal and think of the exciting road trips and adventures that await you.
Once you’ve saved enough for your initial car deposit, the next thing to do is to be prepared for when you discuss your car loan and deposit with a lender.
Things to remember when putting down a car deposit
Do the necessary checks before paying.
Book in a test drive and make sure that you’re getting the right car. If you’re buying a used car, be sure to run a car history check early on.
Carefully examine the contract before signing.
Read the vehicle loan contract carefully and be wary of verbal agreements. This part may be a little tedious, but it can help you avoid car financing mistakes and save money in the long run.
Don’t be afraid to negotiate a car deposit.
Don’t hesitate to negotiate the terms for your vehicle deposit. In some cases, they may be willing to accept a lower deposit amount depending on your credit score and the car you’re looking at buying.
Saving for a car deposit may not be the most exciting part of car ownership, but all of the benefits that come afterwards are definitely worth all the effort.
With determination and careful planning, you’ll soon save up for your initial car deposit and find yourself behind the wheel of your dream car. Better yet, if you speak to us, we can help you through the process!
Find the right vehicle at the right price with Private Fleet
Private Fleet empowers you to gain all the benefits of a fleet purchase but as a private buyer.
Backed by decades of vehicle industry experience, fleet buying power and a network of car dealers across Australia, we are here to ensure that buying your next vehicle will be as straightforward as possible for you, whether you’re ready with your car deposit or not.
Shopping for a car is an enjoyable process – let us make it hassle-free, too.
Reach out to us today for a seamless and simple car-buying experience.
Disclaimer: The article is for informational purposes only and does not constitute financial advice. The content is not intended to be a substitute for professional financial advice, and readers are advised to consult their financial specialist before making any financial decisions. Readers are solely responsible for their own financial decisions and should conduct their own research and due diligence before making any investments or taking any financial action.
Level 2, 9 Help Street