One of the final steps you can take to help you to save up for your down payment for your first home In Canada is to downgrade your current vehicle. Downgrading your vehicle sounds like a crazy notion at first. For most of us, driving a car is not a luxury, it’s a necessity. For some people, it isn’t always necessary to own a vehicle, for example, those who live in the city.
In this article, with the objective of reaching your down payment goal firmly at the forefront of our minds, we outline a few ways and reasons why downgrading your vehicle can help you get to that goal even quicker.
Do You Have More Than One Car In Your Household?
If you have two cars in your household, ask yourself is this absolutely necessary; could you get by, for maybe just even a year with one car? While this may seem like a drastic step, it can significantly help you when you are trying to save for your down payment. Selling a car will instantly raise a lump sum of cash which you can then stow away. However, there is also then the monthly maintenance and running costs that you will be saving as well.
Depending on your individual circumstances, exactly what you used that second vehicle for will need to be considered too. It may be that it was used to help you commute to a job, or perhaps used to take children to school – getting rid of the car could mean you may need to plan the use of the shared car, use public transport, car share, or even ride a bike instead. Whatever the alternative, it is sure to be saving you money and as such will be a worthwhile transition!
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Downgrade or Trade in Your Current Vehicle
Driving around in a gas guzzler might be appealing to some folks. However, if you are ever going to get together your down payment money for your new home in Canada, downgrading your vehicle might be a great option to save you big bucks. You could switch to a model that’s a little older, that has a smaller engine size, or even change to one which is a lower insurance group – all of these changes will save you cash. By selling your car and downgrading, you will also get a nice lump sum which you can put away and take a nice chunk out of your savings target immediately.
Lower Your Monthly Payment Costs
If you do not own your vehicle outright, then there are still a few options available to you. The first thing you can do is to try and negotiate with your lender. Now, if you have already purchased your vehicle there might be things your lender can do. If you believe you are facing a period of financial hardship, they might be able to defer some of your current payments, this won’t lower them, but will merely bide you extra time. One option which will lower your payments is increasing the term of the loan, it might not suit everyone, but it sure might be able to help you reduce your monthly payment costs towards your vehicle.
We can often forget just how much of our money we plow into owning, running and maintaining a vehicle. The initial outlay for the purchase of the vehicle is just the start! There is fuel, taxes, insurance; not mention repairs and parking costs too. Downgrading your vehicle is an excellent way to reduce your outgoings, and who knows, if you walk, or cycle a little bit more. As a result, it could even help you get that little extra exercise in your life as well.