How to Save for a Car

Seven tips for saving up for a car.


Saving up for a car is a lot work. On the one hand, at the end of it you have a new car, but the process of getting there can be challenging. With these 7 tips, plus a few fun facts along the way, you’ll be able to find the best way to save for your new and car get some helpful info on how to save money once you have it.

1. Decide how much you can afford

A crucial part of saving to buy a car is figuring out how much you can spend on a car. It’s best to do this before you start looking so you don’t find a car you love that will stress your finances. One way to do this is to create a budget so you can see how much you realistically can put toward a purchase each month based on your current spending.1

Another thing to look at is what your debt-to-income ratio will be after your purchase. To find this number, take the amount of your total debt, including any loans, credit cards or mortgages. Then divide that number by your monthly income before taxes. Debt-to-income ratio is important because it affects your credit score, and most lenders won’t give you a line of credit that takes your ratio over 43%.2

Fun Fact: There are over 1.4 billion working cars all over the world.3

2. Find the best financing

Before you go to a dealership to buy a car, it might be helpful to shop around for the best auto loan. While you can get an auto loan from the financing department of a dealership, you’ll often get better rates from a credit union, bank or online bank.4 If you want to compare multiple loan offers at once, there are several online tools like Auto NavigatorSM and Car Search to help you in your search for financing and for specific vehicles. Once you’ve decided on the best auto loan for you, you can see if the dealer has a better rate before buying your car.

Fun Fact: The average American spends 300 hours in the car a year.5

3. Consider paying for a car with cash

It’s not always an option, but if you have enough money in your savings, there are advantages of buying a car with cash. You won't buy a car that's more expensive than you can afford, you'll skip the interest, and you won't have to make monthly car payments. Just be sure that you have enough in savings after buying your car to cover any emergency expenses.

Fun Fact: Henry Ford’s famous Model T cost $825 in 1908 or about $18,000 today.6

4. Calculate how much to put down

Figuring out how much to save for a car down payment can be tricky. It used to be a rule of thumb to have a 20% down payment. Today, putting 20% down is less common because cars prices have grown but income hasn’t increased to keep up so people have less money in savings for a car down payment.7

There are a few benefits of a down payment. The most obvious one is that it lowers the amount of money you need to borrow. This means that your monthly payment will be lower, and you’ll pay less interest over the life of the loan, which saves you money. A larger down payment can even qualify you for a better interest rate, potentially saving you even more money.7 Find the down payment that makes the most sense for you, so you don’t have to pay too much interest, but don’t deplete your savings either.

Fun Fact: Lead batteries, the kind found in most cars, are the most recycled product in the United States and are recycled 99% of the time.8

5. Make saving for a car automatic

Deciding how to save up for a car doesn’t need to be difficult. One way you can begin saving money for a car it is to set up an automatic savings plan so that a certain amount of money from your paycheck goes into your savings account each month. This way, you won't be tempted to use it. Another way to start saving up for a car is to “test” your monthly payment. Just take what your monthly payment would be for your car and put it into your savings account. This gives you the added benefit of seeing what paying the monthly payment would be like.

Fun Fact: It’s predicted that 1 and 4 cars will be self-driving by 2030.3

6. Keep up to date on maintenance

Once you’ve purchased your car, keeping it in good condition can save you some serious money in the long run. While it may seem tempting to skimp on upkeep, regular maintenance like can help prevent any expensive major repairs. So, things like regular oil changes and rotating your tires can keep your vehicle running smoothly, and end up saving you money over the life of the car.9 If you have any questions about how often your car needs maintenance, just check the manual.

Fun Fact: A 1966 Volvo P1800 holds the world record for most miles driven with over 3 million miles.10

7. Maximize your fuel efficiency

Another way to save money on your car is to get the most miles per gallon. Keeping your tires inflated properly and changing your air filters every 30,000 to 40,000 miles can improve your gas mileage, saving you money at the pump.11 Also be mindful of how you drive—accelerating and braking gradually whenever you can will increase your fuel efficiency and put less wear and tear on your vehicle.11

Fun Fact: The world’s first speeding ticket was given in 1902 for going 45 mph.12

Next time you’re in the market for a new car these tips can help you save money and find the right car for your budget. Saving for a car doesn’t have to be difficult. All your planning will be worth it when you’re able to drive in your new car and still have some breathing room in your budget.


This site is for educational purposes. The material provided on this site is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any Capital One product or service to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional.

  1. Consumer Reports. “How Much Can You Afford to Spend on a Car?” Consumer Reports. Retrieved from: www.consumerreports.org/buying-a-car/how-much-can-you-afford-to-spend-on-a-car/

  2. “What Is a Debt-to-Income Ratio? Why Is the 43% Debt-to-Income Ratio Important?” (2017, March 03). Consumer Financial Protection Bureau. Retrieved from: www.consumerfinance.gov/ask-cfpb/what-is-a-debt-to-income-ratio-why-is-the-43-debt-to-income-ratio-important-en-1791/

  3. Garret, O. (2017, March 03). 10 Million Self-Driving Cars Will Hit The Road By 2020—Here's How To Profit. Retrieved from: https://www.forbes.com/sites/oliviergarret/2017/03/03/10-million-self-driving-cars-will-hit-the-road-by-2020-heres-how-to-profit/#2c1aa96d7e50

  4. Dratch, Dana. “10 Steps to a Great Deal on a New-Car Loan.” Bankrate, Bankrate.com, 15 Dec. 2017. Retrieved from: www.bankrate.com/loans/auto-loans/10-steps-to-your-best-deal-on-a-car-loan/

  5. Americans Spend an Average of 17,600 Minutes Driving Each Year. (2016, September 06). Retrieved April 16, 2018, from: https://newsroom.aaa.com/2016/09/americans-spend-average-17600-minutes-driving-year/

  6. Ford Motor Company unveils the Model T. (n.d.). Retrieved from: https://www.history.com/this-day-in-history/ford-motor-company-unveils-the-model-t

  7. Montoya, Ronald. “How Much Should a Car Down Payment Be?” Edmunds, 7 Nov. 2017. Retrieved from: www.edmunds.com/car-buying/how-much-should-a-car-down-payment-be.html

  8. News Releases. (n.d.). Retrieved from: http://www.doerun.com/media-center/news-releases/article/articletype/articleview/articleid/230/lead-batteries-are-most-recycled-consumer-product-in-america

  9. Olsen, Patrick. “5 Things to Know About Oil Changes for Your Car.” Consumer Reports. Retrieved from: www.consumerreports.org/car-maintenance/things-to-know-about-oil-changes-for-your-car/

  10. Highest vehicle mileage. (n.d.). Retrieved from: http://www.guinnessworldrecords.com/world-records/highest-vehicle-mileage

  11. Collins, Dan. “20 Useful Tips to Improve Your Gas Mileage.” Carbibles, 20 Mar. 2018. Retrieved from: www.carbibles.com/improve-gas-mileage/

  12. 17 Weird and Wonderful Car Facts You Need In Your Life! (2017, July 26). Retrieved from: https://www.holtsauto.com/redex/news/17-weird-and-wonderful-car-facts-you-need-in-your-life/

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