woman holding keys to a new car and smiling.

Saving to buy a car? Here's what you should know.

Whether you’re preparing to buy your first car or replace a current vehicle, you will need to first determine what kind of car you want and how much you can afford.

While buying a new car has its perks, it can get expensive. The average cost of a new car in early 2017 was around $31,000. Given that most new cars depreciate by as much as 50 percent in the first three years of ownership, you might want to consider buying a used car that’s about two to three years old.

Ready to get started? These three tips will have you well on your way to saving and buying a new (or new-to-you) car:

Figure out how much you can afford. Determine what you can afford, and be realistic. The last thing you want to do is purchase a car that’s out of your budget that you will struggle to pay for each month. If you are not sure what you can afford, experts recommend that your car payment not exceed 10 percent of your gross income. There are also several car buying calculators available to help you determine how much you can afford.

Also, don’t forget to calculate into your budget insurance costs, money for gas, maintenance costs, and in some states personal property taxes. They can add up quickly.

Get your credit in order before applying for a car loan. Your credit score will determine what kind of loan interest rate you can get, and may also affect how much you plan to put down when purchasing a car. If you’re preparing to purchase a car make sure you’ve been paying your bills on time and reducing debt—these two factors account for 65 percent of your credit score.

Shop around for a good car loan interest rate and check with prospective car dealerships to see what type of financing specials they are offering.

Learn more about how your credit score is calculated.

To order your free annual credit report, visit annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

Make a savings plan. Once you’ve decided to buy a car and know what you are looking to spend, come up with a plan to save for your down payment. Set up a separate savings account for your “car fund” and have the amount you wish to save directly deposited into that account each month so that you don’t even see it. Saving automatically is one of the best and easiest ways to save.


Need some support to reach your car savings goal? America Saves is here to help! Take the America Saves Pledge and we’ll send you tips and information to keep you motivated towards saving for that down payment soon enough. Think of us as your personal support system.

TAKE THE PLEDGE


While buying a new car has its perks, it can get expensive. The average cost of a new car is around $31,000 >> http://bit.ly/2hCAEqL 

Tweet this now

Take the Pledge

Savers who make a plan are twice as likely to save successfully. 

Take the America Saves Pledge

Tip of the Day

  • Written by Katie Bryan | December 23, 2013

    Tip to Save During the Holidays: Decide how much you can spend. http://ow.ly/pX9nu via @Bankrate

Saver Tips and Stories View all »

Make it Automatic

Written by Lindsay Ferguson | July 2, 2019

Holding ourselves accountable can be tough. Maria knew that if she didn’t “set it and forget it” she would have a hard time making sure her regular savings deposits were happening. In April, she took the America Saves Pledge and created a savings plan to increase her emergency fund.

Read more...

Challenging Herself to Save

Written by Sara Cooper | April 15, 2014

It all started when Marchale Burton overheard Alabama cooperative extension colleague Isaac Chappelle, coordinator of Alabama Saves, explaining how saving just a little bit – even change – is all it takes to become a saver. “I thought about that,” Burton said, “and wanted to see if it would work.” So, she challenged herself to see how much change she could save.

Read more...

Transforming “I Can’t Save” to “I Will Save”

Written by Guest Blogger | January 13, 2016

You will not believe what it took to completely change my life. About three years ago, the HR Administrator of the corporation where I worked (as a temp with no benefits) forwarded an email to me. Fifteen seconds. One small act of kindness. That's it - that's all it took!

Read more...

Receive Updates

Take the Pledge

Written by Super User | September 16, 2013

Start Saving

Receive Texts

Written by Tammy G. Bruzon | July 15, 2014

Learn More

Partner News & Updates

Written by Katie Bryan | October 18, 2013

Sign Up