How to Save for a Car

Buying a car is a big milestone. It gives you freedom, convenience, and that small sense of pride every time you grab the keys. But let’s be honest — saving up for one can feel like a long journey.

A car might not be a financial investment, but it can definitely improve your quality of life. The comfort, convenience, and time it saves often make it a worthwhile purchase. Everyone has their own reasons for wanting one, and that’s perfectly okay.

Whether you’re earning minimum wage, working part-time as a student, or already in a stable job, figuring out how to save money for a car can be tough when bills, food, and rent keep getting in the way.

Figure Out How Much You Can Actually Afford

Let’s start simple: how much should you save for a car?

Experts usually suggest that your car expenses (including monthly payments, insurance, fuel, and maintenance) shouldn’t go beyond 15–20% of your monthly income. 

So if you earn $2,000 a month, your total car-related budget should be around $300–$400.

Now, if you’re planning to buy in cash — or at least make a big auto loan down payment — you’ll want to calculate your car fund based on the total cost of the car plus extra fees like:

• Taxes and registration
  
• Insurance (often around $100–$150/month for beginners)
  
• Maintenance and repairs
  
• Fuel or charging (if you’re considering an EV)

Here’s a handy calculator to help you see if buying a car fits your budget.

Tip: Set up a designated savings account just for your car fund, so you won’t be tempted to use the money for something else. Most digital banks now let you create savings goals, like setting aside money specifically for a car.

Decide on a Car Type (New or Used?)

This choice will shape your overall car-buying timeline and budget. 

Below is a quick guide to help you decide whether a new or used car is the right fit for you.

Factor	New Car	Used Car
Price	More expensive — the average new car costs around $47,500.	More affordable — used cars average $25,500, depending on mileage and model.
Depreciation	Loses about 16–20% of value in the first year.	Already depreciated, so value loss is slower.
Maintenance Costs	Usually lower at first since everything is new.	May need more frequent repairs or part replacements.
Warranty	Comes with a full manufacturer’s warranty.	Might have limited or no warranty, unless bought certified pre-owned.
Financing Options	Easier to qualify for loans with lower interest rates.	Loan rates can be slightly higher, especially for older cars.
Insurance	Higher because replacement costs are greater.	Lower premiums since the car’s value is lower.
Customization	You get to pick the color, trim, and features you like.	You’ll need to work with what’s available in the market.
Reliability	Very reliable and problem-free for the first few years.	Reliability depends on the previous owner’s maintenance.
Best For	Those who plan to keep the car long-term and want peace of mind.	Those who want to save money upfront or buy a car faster.

I did a lot of reading when I was planning to buy my own car. One of the most common tips I found was that if you’re going for a used car, always bring a trusted mechanic who knows the ins and outs of vehicles. Avoid shady car salesmen, and if possible, buy from a private seller — just make sure to get a pre-purchase inspection. Also, do your research to find out which car models or production years are known for having problems.

But if you’ve got a bit more budget and want peace of mind, especially from sudden breakdowns in the middle of the road, then buying a new car might be the better choice.

According to experts, a good rule of thumb is to put down 10% for a used car and 20% for a new car as your down payment. So if your dream used car costs $15,000, aim to save at least $1,500 for the down payment. Of course, the bigger your down payment, the lower your loan interest will be — which can save you a lot in the long run.

Calculate How Long It’ll Take You to Save

Here’s where your monthly savings goal for a car comes in handy.

This calculator helps you estimate how long it’ll take to save up for a new car or a used one, depending on your financial situation.

For example:
If your car costs $20,000 and you want to save a 20% down payment ($4,000), saving $400 a month would take 10 months.

Create a Realistic Car Savings Plan

Here’s the best way to save for a car, even on a low income:

Track your spending.
You can’t save what you don’t track. Try free apps like Google Sheets. I personally use Notion to track my expenses.

Cut unnecessary costs.
Do you really need three streaming subscriptions or daily coffee deliveries? Maybe downgrade one plan or share a family account. Redirect what you save toward your car fund instead.

Automate your savings.
Set a fixed amount to transfer automatically to your vehicle savings account each payday.

Earn extra income.
Try side gigs like online tutoring, freelancing, or delivery driving, or even selling digital templates; these can help your car fund faster. Use your weekends or free time.

Sell old and unused stuff.
That pile of clothes you “might wear again someday”? Yeah, it’s been 3 years. Turn it into cash! Sell old gadgets, clothes, or random things lying around on Facebook Marketplace, Carousell, or eBay. You’ll be surprised how quickly those “junk drawer treasures” can turn into real money for your car fund.

Plan for Ongoing Costs

Your car savings journey doesn’t end when you buy the car. Owning a car comes with recurring expenses that can sneak up on you if you’re not prepared.

1. Car maintenance

Oil changes, tire rotations, and brake checks all cost money. Try to set aside $50 to $100 a month for maintenance.

Tip: Learn basic car care on YouTube, like checking tire pressure and changing your oil or wipers. It can save you a lot of money over time. I recommend watching ChrisFix on YouTube if you want to learn practical car maintenance tips.

2. Car repairs
Even with good maintenance, things can still go wrong. A flat tire, a dead battery, or a weird noise can show up when you least expect it. And let’s be honest — that check engine light has a special talent for ruining your day! Build a small car emergency fund of around $1,000 so you don’t have to rely on credit cards every time something breaks.

You might also like: How to Build Your Emergency Fund

3. Car insurance
Insurance is one of the biggest ongoing costs of owning a car. Take time to compare quotes from different providers before committing. Prices can vary a lot, and switching providers can sometimes save you hundreds or even thousands per year.

Extra tip: Ask about safe driver discounts or usage-based insurance. Some companies offer lower rates if you drive responsibly.

4. Fuel
Gas prices can change anytime, so it’s smart to plan for them. Use apps like GasBuddy or Waze to find cheaper fuel stations near you. You can also combine errands into one trip to save both fuel and time.

5. Registration and taxes
Keep in mind that you’ll need to pay registration fees and local taxes every year. Add these to your budget and set a reminder so they don’t catch you off guard.

6. Parking and tolls
If you live in the city, parking fees and tolls can quickly add up. Include them in your monthly car budget to avoid surprises. Parking tickets are also an expensive lesson you don’t want to learn twice.

Tips for Students and Low-Income Earners

If you’re wondering how to save up for a car as a student or how to save money for a car with a low income, here’s what can work:

• Start with a used car or a starter vehicle.
• Consider a co-signer to help you qualify for a smaller loan.
• Use public transportation more while you save.
• Take advantage of student car insurance discounts.
• Try side hustles that can fit your schedule. These days, you can earn extra through dog or house sitting, freelancing, or online gigs. You can tutor, offer virtual assistant services, or start on Fiverr or Upwork.

You might also like: How to Budget on Low Income

FAQs

How to save up for a car with minimum wage?

Start small. Save at least 10–15% of your income. Even $50–$100 a month adds up.

What’s the fastest way to save for a car?

Cut unnecessary expenses, automate savings, and find a side hustle.

What’s the cheapest way to buy a car?

Buy a reliable used car with a clean history, pay in cash if possible, and compare multiple sellers. 

What’s the best amount to save for a car?

At least 10–20% for a down payment, plus funds for maintenance, taxes, and insurance

How much can I save refinancing my car?

Refinancing can lower your car loan interest rate by 1–3%.

Always compare offers and check for fees before switching lenders to make sure the savings are worth it.

How much to put aside for car repairs each month?

The general consensus from automotive experts and financial planners suggests you should budget for $100 to $125 per month for car maintenance and unexpected repairs.

Final Thoughts

You’ve got the tools, the tips, and the plan. Now, it’s all about putting them into action and watching your savings grow.

Saving for a car isn’t about how fast you can do it. It’s about being consistent and making smart money moves along the way. Even if it takes a year or two, that’s totally fine — because when you finally get behind the wheel of a car you worked hard for, the feeling is priceless.

The steps you take to save for a car can also work for bigger goals, like buying a house. Take a look at How to Save for a House While Renting for tips on making steady progress, even while paying rent.