How To Save Money To Buy A Car

How to Save Money To Buy a Car

Buying a car is a big step....especially since nowadays, car prices are one of the highest ticket items that you will ever encounter.

Consider this as well.....whatever car you decide to buy will have a powerful effect on how much it costs overall in terms of things like insurance and maintenance.

For instance, buying a flashy red sports car is probably going to cost you a lot more over time than a serviceable modest-priced SUV.

Budgeting to buy a car is a process that can be painful if you don't plan ahead wisely but doing it correctly can give you a great amount of satisfaction.   

By thinking it through carefully and planning, you'll be able to make the right choice in the end and you can save money doing it!

Let's look at a plan for saving to buy a car.

public domain photo
public domain photo

Tips and Tricks of Saving to Buy a Car


  • Get some idea of the kind of car that you want but be realistic. Consider durability, safety records, maintenance costs, fuel costs, year and make of the car. How much are maintenance and car insurance costs going to add to your bills? Make sure you can afford the car in all aspects.  Check out new car guides available at the library, banks, or on-line if you're buying new. Check out blue books and other guides if you're considering a used car.

    Decide if you want an environmentally friendly car. Can you can afford one or do you need something more along the lines of a pickup for your job? All these questions should come into play while you are deciding what kind of car you want but more importantly, what kind of car you need.
  • Now that you've decided what kind of car you can actually afford, price shop. Calculate out how much your bills are and be honest. Include groceries, projected gas money, bills, utilities, entertainment, etc. How much can you afford to pay per month on top of those expenses for a car including insurance and maintenance, fuel costs?
  • What kind of car...new or used? Consider new cars if you've price compared but also consider older models such as 1-3 years old with 10,000-40,000 miles on them. You'll save on the depreciation and still have about three quarters of the life of the car left for a lot less money.
  • Next, figure out the cost of the car for 36 months. Whatever number you come up with that you'll have to pay for a car, subtract 20% down payment cost and then divide the remainder of the balance by 36 months. You won't want to pay beyond 36 months for a car loan because you'll save on your monthly payment yes....but you'll pay an exorbitant amount of money thrown away on interest.

    Let's say you find a car that you want for $12,000. You'd need to come up with a down payment of $2400. Then you'd have a balance of $9600 owing. If you could easily pay $300 per month for a car payment, it would take you 8 months to save for the down payment. Then it would take you 32 months to pay off the balance and you'd own the car....using the figure of $300 per month.

    But of course the car will end up being more than $12,000 when you add in the interest paid for 32 months so you will end up paying longer than 32 months to pay off the car....probably 36 months or less.

    Key elements to saving money for a car are finding a car that is in your price range and that won't cost you an arm and a leg to drive, isn't prone to mechanical problems or high depreciation rates, and that is as fuel efficient and safe as your budget allows.
  • Next thing is to shop for the car. Find the best deal possible. Don't discount any sources. Try the Internet, the papers, dealerships, even craigslist and eBay if you're planning on buying a less than new car. Remember, buying a car with low miles and a couple of years old is going to save you big bucks.

  • Find the best interest rates and loan terms you can. Again, use the Internet, local lending institutions, credit unions, etc. Negotiate with lenders or banks that you currently deal with and ask them to match Internet rates for loans and interest rates. If they won't, use an on-line company for financing your car. Settle only for the best rate you can get.

More Tips on Saving Money To Buy A Car


Check the bluebook for prices to make sure you're not going to be spending more on the car than you should!

If you have a trade-in, don't waste it on a new or used car sale.  Sell it privately on craigslist or yourself because you'll get far more than you will on a trade-in from a dealer.

Have a mechanic check any used car to make sure the car is truly reliable and up to par.

When buying a car, what you see is what you get. There is a no return policy on buying a car so if you decide you're in over your head, you'll have to investigate other options rather than saying you decided against it.....whether it's in 3 days or 3 months.

If you can swing it, pay cash instead. It doesn't take that long to save up the money if you have the budget for it, and you'll discover that it has a whole up side to it......growing your money while you save money!  Check on-line savings accounts for interest rates that are about 5-6 times greater than brick-and-mortar bank rates!

Remember to negotiate, negotiate. Get the best price on any car you buy and make sure you've done your research. Know the new car guides or the bluebook values and avoid hidden costs. Then when you finally start talking the loan, do not take no for an answer. Know the best possible loan rates at the time and don't accept anything less.

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Comments 6 comments

mathira profile image

mathira 4 years ago from chennai

Very useful tips for car lovers.


Simone Smith profile image

Simone Smith 5 years ago from San Francisco

Very cool guide! I feel all set to start saving now :D


akirchner profile image

akirchner 5 years ago from Central Oregon Author

Hanna - what a fabulous tip! That would be like rental cars over here or I suppose we have demo cars, too!


Hello, hello, profile image

Hello, hello, 5 years ago from London, UK

Over her I found that buying a demonstration car which is then three or four months old and had been driven by reps is the best bargain. It reduces up to £4,000 from a new car and is in perfect condition.


akirchner profile image

akirchner 5 years ago from Central Oregon Author

Thanks Fiddleman for stopping by and that is a GREAT idea!


Fiddleman profile image

Fiddleman 5 years ago from Zirconia, North Carolina

Great hub. I have also noticed several repo's at our CU, sometimes they take bids and a really good deal can be cut.

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