How to Save Money for a Car: 7 Vital Tips to Remember

The average price for a new car in the United States hovers at $36,718.

If your current car is on its last leg, hearing that price probably gives you anxiety. Not many people have that kind of cash sitting around. But don’t worry, the sooner you realize you’re going to be in the market for a new vehicle, the more time you have to save.

Are you wondering how to save money for a car? If yes, keep reading to learn some of our best tips.

1. First Figure Out How Much Money You Need

The first step in figuring out how to save up for a car is knowing how much money you’ll actually need. There are multiple factors that go into deciding your budget.

First, you need to figure out what make, model, and year of the car you want. Not quite sure what car you want to purchase? Check out these car reviews to figure out which vehicle best fits your needs.

Then, you need to decide how you’re going to pay for that vehicle. Will you be paying for it all in cash? Or are you going to finance the car and therefore only need a down payment?

Once you have a monetary amount in mind, it’s easier to break down that number into achievable savings goals.

2. Send Money Directly to Savings

The easiest way for how to save for a car is to set up a direct deposit into your savings account.

Start by dividing the total amount of money you need by the number of paychecks you have until purchasing the vehicle. For example, if you get paid bi-weekly and need $6,000 for your new vehicle in six months, you should be saving $500 from each paycheck.

Instead of keeping that money in your bank account and being tempted to spend it, have it directly deposited into a separate savings account. This can be set up by talking to your HR department at work. Then, that money will automatically be in a sperate account, where you’ll be less likely to spend it.

3. Act Like You Already Have a Car Payment

If you don’t want to go through the trouble of setting up a direct savings deposit, the second-best way to save for a car is to pretend you already have a car payment.

This method works best if you’re planning on financing your vehicle purchase. Once you know how much you want to spend on a new vehicle, you can make a rough estimate of your monthly car payment. Use an online car payment calculator to help you do the math.

Then, each month set aside this amount of money into your savings account. So if you figure that your future car payment is $300 a month, act like you’re already paying this bill.

Not only does this help you save up for your car, but it ensures that you’ll be able to afford the payment after your purchase. If you discover that you aren’t able to save that amount each month, you may need to adjust your future plans. This could mean saving up for a larger down payment or choosing a different vehicle to purchase.

4. Eliminate Unnecessary Spending

When you’re saving for a car, the easiest thing you can do is eliminate unnecessary spending.

This may seem like a simple solution, but it’s not always easy to spot unnecessary spending. First, start by making a monthly budget. Include the cost of your bills, like rent and utilities, along with necessities like groceries. This budget should include only your absolute necessities since you’re working on saving money.

Then, stick to this budget for a few months until you have the savings you need.

5. Pick Up a Side-Hustle

If you’re really desperate to buy a new vehicle, you may want to consider picking up a side-hustle. The easiest way to save money is by making more money.

There are plenty of side-hustle opportunities available today. Use your current vehicle to sign up for a ride-sharing gig like Lyft or Uber. Register yourself online to accept jobs as a freelance writer or transcriptionist. Offer yourself up for yard work or home improvement jobs to your friends or family members.

And another great benefit of an extra job is that you’ll have less free time to unnecessarily spend money!

6. Use Your Current Car to Offset the Price

When you’re saving up for a car, don’t forget to use your current car to offset the cost of your new car. You can do this in one of two ways.

First, you can sell the car yourself. This allows you to price the car according to what its worth and receive the most money in return. But, you could be waiting a while to find the right buyer and it could be hard to time selling your old car with buying your new one.

Or, you can trade-in your car to the dealership you’re buying from. This is a quick process done at the same time as your new purchase. But keep in mind that you’ll generally get less money this way.

7. Make Sure You’re Getting the Best Deal Possible

Our final tip is to always make sure you’re getting the best deal possible before purchasing your new vehicle. The last thing you want to do is spend months saving up for a new car only to later discover you overpaid.

Once you know the make and model of the car you wish to purchase, you can shop around online to find the best deal. Check out all your local dealers to see if they’re running any sales. You can also search the online for-sale pages to see if you can get a better deal from a private seller.

Make sure you don’t get too focused on the overall price tag though. You’ll also want to consider the year of the vehicle, mileage, and overall condition when comparing prices.

Check out these new car buying tips for more advice on how to get the best deal possible.

Now You Know How to Save Money for a Car

Using these seven tips, you now know how to save money for a car.

Start by figuring out your budget then set up automatic savings through your direct deposit. You can act like you already have your future car payment and save that amount each month or try eliminating unnecessary spending. Lastly, you can pick up a temporary job to earn extra money, trade-in your current car, and make sure you’re getting the best deal possible.

Want to make sure you’re not wasting all this money and effort? Read this article to discover the best and worst cars in regards to keeping their value.