For many Americans, living paycheck to paycheck is a way of life. With the costs of living skyrocketing and wages remaining low, people find it harder to budget, plan and save. The problem with the reality of paycheck to paycheck is the inability or challenge to make bigger purchases. One crucial purchase that keeps the paychecks coming is a car.
Life without a car can be difficult, especially if you live in an area where public transportation is poor or eats up excess time you could be spending with family and friends. So how can you get a car if you have no down payment and no savings, and live paycheck to paycheck?
The Paycheck to Paycheck Trap
It may seem impossible to save, but it can be done. Think of it as a slow-saving plan. Even contributing a few dollars a day can build over time. The key is to not touch the money unless it’s an absolute emergency. Here are a few tips and tricks for finding money for the proverbial piggy bank:
- Find ways to cut a dollar here and there—then put the money away: We’ve all done it, bought a $7 coffee on a rushed day, shopped hungry and without a list or splurged on the name brand apparel. Get strict with yourself and make the goal to sock a dollar or two (or ten) away each day.
- Revaluate your Plans: Most people aren’t getting the best value for their money. It’s time to look at all of your insurance, phone, cable and internet plans and find where you’re getting taken for a ride. Contact companies and start negotiating. If you don’t have time, use a service like Billcutterz. The other plan to look at is your grocery shopping plan. The key is to actually plan—write down meals, ingredients, how to use leftovers and shop smart.
- Conserve: Lastly, look at ways to conserve in a number of areas. Ask yourself which expenses are necessities and which are not. Get rid of excess cable channels and turn off lights and heat when you aren’t using them. Every place you can conserve and save money is a way to stretch it further.
- Purge: If you’re looking to make a quick buck, take stock of your home. What do you have sitting around that’s sellable? Did you just get the latest iPhone and have the old one sitting in the drawer? If it’s still in good condition, it can usually get a decent price on Craigslist or eBay. Clear out name brand clothes, furniture, vintage China you’ll never use and anything else you can find. If the weather is good, host a yard sale. Use the money to start your savings account.
Find a Dealership that Will Work with your Situation
Not all dealerships are created equal, and some understand that people live paycheck to paycheck. Not wanting to make your financial situation worse, they’ll work with you to find a reasonable down payment and monthly payment. If your credit situation is good, you may be able to get by with no down payment and keep the savings that you’re working on.
Come prepared to present your full financial picture. You’ll want to gather the following items:
- Your credit score. If it’s really low, take a few months to bump it up a bit to have more negotiating power.
- Your address. It’s ideal if you’ve lived at the same address for a year or more. Otherwise, you may run into a few problems.
- Income. Steady jobs and income go a long way to proving your reliability. Make sure you have an accurate picture to show that you’re employed and responsible.
- Bank information: Balances for both checking and savings, and any other assets you have.
- Loan rates. Know where the current rates are. You may have to go with a higher rate if your credit is less than stellar or you have no down payment, but at least know the starting point.
- Be realistic. If you can’t afford a Rolls-Royce, don’t buy one. Be very realistic about what you can afford and what will fit in your budget. Use that money you’ve freed up as your monthly payment amount. Better yet, use less and put a portion in savings. Don’t forget to factor the additional costs that come with owning a car, like insurance, gas and maintenance.
- Bring a Cosigner if Needed. A cosigner may help you get better rate, which means a lower payment. It can also mean the difference in the necessity of a down payment or not.
A good dealership will understand what the average American faces financially. They’ll work with you as long as it takes to get you into a car—even if you live paycheck to paycheck.