How to save for a car

Set your spending goals and budget early for your next ride.

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Couple getting a car

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The more money you have upfront to pay for your car, the less you’ll have to borrow — saving you money in the long run.

How to save for a car

1. Determine what you can afford and set a goal

Determine how much you want to spend on a car and check out makes and models that fit your budget. Figure out how much you want to have for a down payment and what you can afford to borrow.

2. Consider other car-related expenses

Beyond the cost of the vehicle, remember to put extra money aside for things like insurance, repairs and maintenance. How much you’ll pay for insurance depends on factors like your age, where you live, what you drive and your driving record.

3. Set a timeline

Set a purchase date and break down the total amount you want to save into monthly payments. Make sure the amount fits into your budget and won’t leave you strapped for cash. It helps to consider these deposits a mandatory bill to help keep you on track and focused on saving.

4. Pick an account and make regular contributions.

Find an account that works for you, considering how much you have to open the account, how much you plan to save and how easily you want to access your money.

How much should I save for a car?

How much you should save for a car largely depends on if you want to pay for it in full or take out a loan. The average cost of a new car is $37,577, according to a December 2018 analysis by Kelley Blue Book.

Used car prices typically range between $11,000 and $20,000. Like anything else, how much you’ll spend depends on what you want and what you can afford. Here’s an average of what you could pay for a car based on how much you can save.

New cars:

Cost of vehicleInterestMonthly payment for 60 monthsTotal cost
If saving$37,577Earn 2%$595.49$37,577
If borrowing$37,577Pay 4.21%$696$41,736

Used cars:

Cost of vehicleInterestMonthly payment for 60 monthsTotal cost
If saving$20,000Earn 2%$316.94$20,000
If borrowing$20,000Pay 6.96%$396$23,739

Beyond the cost of the vehicle, you should also account for other expenses that will increase the amount you’ll need to save. Note that these are only averages. The actual costs will depend upon a number of factors such as your age, where you live, what kind of car you drive and your driving record:

  • Car insurance: $1,426 per year
  • Maintenance: $1,000 per year
  • Gas: $1,500 per year

Best accounts to help you save for a car

When shopping around for a savings account, try to avoid fees and compare key features such as eligibility criteria, rewards and bonuses, special programs and accessibility to your funds.

Name Product Interest rate (APY) Fee Minimum deposit to open
Barclays Online Savings
1.70%
$0
$0
Earn 20x the national savings account average with no fees or minimums.
BBVA Money Market
1.50%
$15 per month
(can be waived)
$25
Earn one of the highest annual percentage yields (APYs) if you live in one of 42 eligible states, and access your money by ATM, check or bill pay.
UFB Direct High Yield Savings
2.00%
$0
$100
Earn a competitive rate with a balance higher than $10,000.
CIT Bank Savings Builder High Yield Savings Account
1.85%
$0
$100
A super-high interest rate if you're in the habit of saving at least $100 per month or have $25K in the bank. Earn up to $300 Cash Bonus with a $50K deposit. Open to both current and new customers. Conditions apply
Chase Savings
0.01%
$5 per month
(can be waived)
$0
Get a $150 bonus when you open a new Chase Savings account, deposit a total of $10,000 or more in new money within 10 business days and maintain a $10,000 balance for 90 days. Or get $350 when you open both a Chase Savings and Chase Total Checking account.
UFB Direct Premium Money Market Account
2.00%
$10 per month
(can be waived)
$5,000
Enjoy the security and earning potential of a savings account while maintaining the flexibility to write checks.

Compare up to 4 providers

Tips on saving up for a car

Once you have a goal in mind, there are a number of ways you can save up for your purchase:

Bottom line

Make saving for a car a little less daunting by starting early and setting goals. Once you’re ready to open an account, compare savings accounts to find a product that’s right for you.

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