How to Save Up For a Car to Get You On the Road
Buying a car may not be as big of a purchase as buying a home - not usually, anyway - but it is still important. Your car is what gets you and your family around to where you need to go, and it helps you get to work to make the money you survive on.
As important as they are, most of us do not have the money in the bank to buy a new one when we need it. Instead, we have to save up for a car. If you are part of this group, we have some tips to help you save for and buy a car.
Do You Really Need It?
Let’s start with one question before moving onto how to save up for a car: Do you really need a new car yet or can you wait a little longer? It is almost always cheaper to keep your current vehicle than to buy another one. If you are struggling financially, consider keeping your car a little longer.
Admittedly, there are plenty of times when it is best to get a new car, some of them being:
- If you need work done on the car that will cost you more than the car is worth
- When the car costs you more in gas than it should due to its condition
- If the car is unsafe for any reason
- If your family has grown larger than the number of available seats
If you feel that it is time to move onto a new vehicle, there are plenty of ways to save up for a car. We share quite a few below.
Pick Your Car
Some people wait to pick a car until after they have the money. You can do that if you want, but I feel that it is best to start choosing your car way ahead of time. You do not have to decide on the exact car, but have a few cars in mind that fit your needs. Consider things such as:
- How much space you need
- How far you need to drive on a regular basis
- Insurance rates for different types of car
- Safety ratings and features
- Reviews
- Amount of maintenance and how much it costs to get parts for it
Be Informed
All of these things should be taken into consideration when it is time to buy your car. A sedan will not do you any good if you need to seat 6 people on a regular day. If you have to drive long distances every day, you do not want something that gets you little mileage per gallon. Take a look at several vehicles that will suit you and get as much information as you can about them. You want to make an informed choice.
Consider Getting a Used Car
It is also important at this point to decide if you want to get a new or used car. Each type has its own challenges, so consider this carefully. Used cars are cheaper, but they may not be in the best condition. New cars are more expensive and you are usually paying out a pretty penny every month. Obviously, the choice is yours, but you need to decide early so you know how much you need to save up for a car.
Determine How Much You Need
After you have a few cars in mind and the average price for them, it is time to decide how much you need to save.
Here is a basic fact no matter what you are buying: The more you can pay down, the less you have to finance.
The less you have to finance, the more you save on interest and other finance charges. This is a great way to save yourself money over time.
A good rule of thumb when you save up for a car is to save 10 – 25 percent, but the required amount may vary according to where you purchase your car. Sometimes it also depends on the vehicle, too. The truth is that you probably will not know the definitive amount until you are at the car lot getting ready to pay.
It is important though, as we talk about ways to save up for a car, that we are clear on the fact that car lots are not the only places to find the car you want. You can always take a look at places like Facebook, Craigslist, your local paper, and even in people’s yards. Cars are all over the place, and many of them you can buy outright instead of making payments. Be sure as you are searching for a car that you consider all of your options.
Calculate How Much You Can Afford
This is a biggie. As you are in the planning and saving phases, it is vital that you figure out how much you can afford to pay out for a car and I am not just talking about the down payment - or even just the monthly payments. I mean the full and complete amount the car will cost you.
Monthly Payments
Yes, the monthly payments are a big factor, so let’s talk about it first. You need to determine how much you can afford for your monthly payment. This is what you need to understand, though: If you have $300 left after paying your bills, that does not mean you can afford a $300 per month car payment. You still need some money left over for other things, so you cannot pay out every dime you have leftover.
The amount you can afford to pay monthly is the amount you can afford without going without necessities and other things you spend money on. In a moment, we will get into how to save money, so when you do so, you might be able to afford a higher payment.
Taxes, Tag, and Registration
When you get a car, you have to pay out money almost immediately for your taxes, tag, and registration. The total amount of the car affects these prices.
Insurance
Unless you purchase the car outright, you probably will not be able to drive off the lot without insurance- you are not supposed to, anyway. This is especially true if you are financing the car. Among other things, the type of car you buy will be a factor in how much your insurance rates are. You might want to call around and get a few insurance quotes before signing any paperwork.
Oil Change and Other Maintenance
You also need to factor in the amount of ongoing maintenance you will need, such as your oil change, tires, tuneups and so on.
Repairs
Before purchasing your car, you want to be sure that you can save enough while making your payment for any higher cost repairs.
Fuel
It takes gas to move your car- unfortunately. How much gas is the car you want going to use? How much do you think it will cost you over a year?
These, along with other things, affect the overall cost of the car. Before going out to purchase your vehicle, you need to consider all of these costs as they will affect the amount you can pay every month. These factors should help you determine the type of vehicle you get, how much you need to save before making a move, and how much you can afford to finance. Being wise in this step can help you save up for a car faster, and save yourself a lot of money altogether.
Set a Goal Date
Now that you have a good idea of the amount the car will cost, it is time to move on. You need to set a date for when you want to purchase your car. Your goal date will dictate the amount of work you need to do to save up for a car. The farther away from your goal date, the longer you give yourself to work. It is okay to challenge yourself here, but try not to be completely unrealistic.
If you are broke and do not have an ace up your sleeve, next week is probably a bit too soon. Set your goal date, determine the number of weeks you have, and divide the total you hope to save up for a car by the number of weeks you have to work on it. The answer is your weekly mission.
Pick a Place To Save
When saving for a specific item, it is always best to put the money in a separate savings account than your regular savings - and definitely better than leaving it in your checking. Before you start your mission to save up for a car, decide where you will save the money. Try to find an account with a pretty decent interest rate so you can earn some of your goal money without doing a thing.
1. Dig In the Budget
The first place to look when you want to save up for a car is in your regular monthly budget. You do have one, right? If not, it is a step you really, really need to take especially when you want to save for something. Get on it as soon as possible.
Look at your income, your expenses, and your spending. Sit down with a pen, piece of paper, your bank statement, and your receipts.
- Where are you spending money that you can cut back on?
- What can you cut completely out?
- What are you willing to do without to reach your goal?
Here are a few ideas to get you started:
2. Food
Anytime someone asks me, “How can I save money?”, I always say to start with food. Why? This is one of the biggest areas that people spend more than they need, and there is always a way to cut down.
Eating out can get crazy expensive. I hear single people say to me, “It’s just me, so it’s cheaper to eat out.” No, it’s simpler for the most part, but not cheaper. You can cook a meal for yourself and have enough leftovers for another meal or two for the same price you pay for a value meal.
And, anyway, if you go all of the way cheap and purchase just a $1 burger at a drive-thru, you are most likely going to be starving again in an hour or two, so you will need more food. No matter how many people you have in your home, you will save plenty of money over time by shopping on a budget and learning to cook if you do not know already.
Make a Menu And a Shopping List
Decide what you will eat each week, including snacks, and make a shopping list revolving around those things only. Be sure you have some reusable storage bowls so that you can save what’s left.
Use a Coupon App
My favorite apps are Ibotta and Fetch Rewards. I get the convenience of couponing without having to clip them.
Cook from Scratch
Homemade food is really cheap, really delicious, and much healthier than processed foods. Try to learn some homemade recipes and trade those out for your frozen food at least a few times per month.
Achieve Your Financial Goals. Billry Store Will Make It Happen.
3. Monthly Bills
To cut your monthly bills is another great way to save up for a car. When it comes to utilities, such as electricity and water, many locations only have one option. That is the case here where I live. If we want to save money, we have to cut down on usage. It is not impossible, though. I talked to my family, told them I wanted us to work together to cut our bills. Over about six months, we were able to cut our water and electricity bills in half.
Bills that can come from more than one option, like your cell phone, internet, cable, and insurance, can all be cut down by calling around and negotiating rates. If the company will not negotiate a smaller rate, consider switching companies.
Also, cut out any bills you do not need. If you rarely watch cable or use your gym membership, why are you still paying for them?
4. Debt
If part of your monthly income goes out to debts, whether it is hospital bills, credit cards, student loans, or anything else, consider a debt consolidation loan. By taking out a loan with a lower interest rate and paying off your debt with that loan, you could end up saving hundreds of dollars or more every month.
5. Automate Savings
Often, the best way to save up for a car - or anything really - is to do so without thinking about it. If you have followed these steps, you already know the amount you need to make every week.
Set it up so that your weekly amount automatically goes to the account you are using to save up for a car.
You can either have your employer do this for you or you can set your account up to withdraw that amount from your checking account on payday. Either way, the quicker you get it out of reach - aka your checking - the easier it is to save.
6. Get Any Trade-In Appraised
If you have a trade-in, you should get it appraised before taking it to the car lot - or, at the very least, check out the value of your car online.
Get a trade-in amount from the car lot you are shopping at, too. If the car lot gives you a better deal, good. If not, sell it on your own first. Get the highest amount out of it. Who knows - if it is valuable enough, you might not need to save up for a car.
7. Extra Shifts
For as long as work has existed and people have been employed, if they need more money, they work more hours. No one wants to do this all of the time, I know. At my previous job - one of my many serving jobs - I spent the first few months trying hard to catch up and pay off a ton of debt. People were always willing to hand over their unwanted shifts to me. Sure, I got my money situation fixed, but I was worn out.
As soon as I could breathe, I decided to limit the number of extra shifts I worked. My kids needed me home more and I needed to rest. By then, though, everyone was so used to me working that much that my boss had started scheduling me a ridiculous number of hours. In fact, one weekend I was scheduled to close on a Friday night, be in at 7 a.m. the next morning and work all the way to close that night, and then open again on Sunday.
Trust me, I know working extra shifts all the time is not fun. I empathize - I really do. Sometimes, though, you have no choice - or no immediate choices, I should say.
Sometimes, you have to do things you do not want to do so you can reach goals you really want to reach, but it does not have to be forever.
You know when your goal date to save up for a car is. Just remind yourself that anything you have to do only has to last until then.
8. Side Hustles
If you have something else you can do that people are willing to pay for, you can skip the extra shifts at your regular job. Instead, use your hobby or special skill set to make some side hustle cash. Some common side hustles are:
- Baking birthday cakes
- Mowing lawns
- Sewing
- Cleaning houses
- Washing cars
- Clean out garages
- Resell thrift store items
- Sell photos
- Freelance writing
- Bookkeeping
- Blogging
- Organizing homeschool
- Babysitting
- Pet sitting
And there are plenty of apps that you can make a few bucks on here and there. Do not forget to sell your own unwanted items either. Every little bit helps when you are saving for something, so try anything you can think of.
9. Trade Your Services
Here is one more tip I am going to give that I know works. I cannot guarantee anyone’s success, but I have seen this happen and it is worth a try. If the car you want is at a used car lot, talk to the owner or manager. Ask them if you could work around the lot in exchange for a down payment.
No, I’m not crazy, I promise.
Used car lots often have mechanic shops on the grounds that need some cleaning.
They also need cars washed and parking lots cleaned.
I knew a girl who worked off her car payment every week by running the office on Saturdays.
If the car lot needs some help, the owner may be willing to let you trade some work for either all or a part of your down payment.
10. Buy At the Right Time
As a side note, beware of when you purchase your car. No matter what the sales guy tells you about how good a deal you are getting, remember this: When demand is high, prices increase. It is the simple law of supply and demand. How does this translate to you? Try not to buy when everyone else is shopping for a car. Take tax refund time, for example. This is prime time for car buying. It is one of the few times a year that most of us that live check to check has a down payment.
The problem is that everyone knows this from the car lots to the lenders and insurance companies. The car lot may have a big sale sign on the lot, but is it really a sale? The car itself may or may not be lower than usual, but buyers still end up paying higher finance charges and - typically - higher insurance rates.
Obviously, this is not always the case, but the point is to be vigilant.
Do not just jump into something because it says “Sale”.
Just be careful. If you can, wait to purchase when demand is low. Dealers are often much more willing to negotiate when you need them more than they need you.
11. Consider a Personal Loan
What happens if you need a down payment right now or you just cannot seem to save enough by your goal date? You do have another option. You might consider getting a personal installment loan for all or some of the amount you need.
If you choose to do this, though, be sure that you can afford this payment in addition to your car loan. Or you might try to get approved for the full amount of the car as personal installment loans often have much lower interest and much smaller monthly payments than other options.
Conclusion
It is completely possible to save up for a car as long as you have a plan. As I hope you have seen here, everything about the car and how much it will cost you to get it and keep it should factor into your plan.
There are many ways to save money, so do not limit yourself to just one. Work through the list of ideas above and choose at least two or three things to try. With some patience and persistence, you will find yourself on the road in your new car in no time.