How to Budget to Buy a New Car

Saving money for a new car or a used car that’s new to you doesn’t have to be a source of stress. With the proper planning, you can simplify the process without making a huge financial sacrifice all at once. Save slowly and steadily, making moderate adjustments to your spending habits, and you can soon reap the reward of driving off the dealership lot with the car you desire. This is a good skill to learn and hone, regardless of your age or circumstances, and you can apply this method to virtually any large purchase, including future cars, boats, or even homes.

Part 1 of 4: Honestly assess your budget

Step 1: Make a list of your monthly bills and expenses. When it comes to bills that vary according to season, such as natural gas or electric, you can take the average monthly amount based on what you paid in the previous year.

Don’t forget to include groceries and some entertainment expenses; you don’t have to live like a monk in order to put away some money for either a down payment on or full payment for a car.

Step 2: Calculate your monthly income. Include sources outside of your job, such as alimony or child support.

Then, subtract your monthly expenses total from your monthly total income. This is your disposable income. Use this figure to decide how much money you can afford to put back for a new car.

Bear in mind that you should not use all of it in case of unforeseen circumstances, such as illness leading to missed days at work, or repairs to your current vehicle.

mint car app
Image: Mint App

Step 3: Use a budgeting software. If pencil and paper budgeting isn’t your style, consider a budgeting software to help, many of which are available as a free download.

Here are some of the most popular software programs to figure your budget and keep your spending on track:

Part 2 of 4: Scope out car prices and develop a savings timeline

Without having an idea of how much to save, you can’t predict how long you will need to put money back for a car purchase. This means you should do a little window shopping ahead of time for a good idea of how much the car you desire will ultimately cost you.

Image: Kelley Blue Book

Step 1: Shop around for car prices. If you plan to purchase a vehicle outright, you can check out dealerships along with classifieds in print and online to develop a target savings goal.

For planning on making a down payment, you are likely to stick with dealerships instead of individuals.

payment calculator

Also research how much you will need to pay for taxes on your desired vehicle, your first month of insurance, and registration fees, and add this to the total amount of money you need to save. After all, you want to drive your car after you buy it.

Step 2: Make a reasonable timeline to save the amount you require. Once you know approximately how much money you will require to either purchase a car in full or make a down payment, you can calculate how long it will take to save the required funds.

Take the total amount needed for the down payment or full purchase, plus the related expenses, and divide it by the monthly amount you calculated you can save. This reveals how many months you need to save up for your future new car.

Part 3 of 4: Stick to your savings plan

All of your planning and research won’t mean a thing if you don’t stick to your savings schedule. There is no shortage of things to tempt you into spending above your budget, so you want to take any measures available to you that will keep you on track.

Step 1: Open a savings account purely for your future car purchase if you can. This makes it more difficult for you to dip into your car fund when you are tempted to spend outside of your budget.

Step 2: Deposit your car savings immediately. If your job has a direct deposit option for your paycheck, you may even be able to arrange automatic deposits into your savings account.

If that is not an option, make a point of depositing your car savings immediately after you are paid to minimize the risk of your spending it prematurely. Then, just pretend that money doesn’t exist until your savings plan comes to an end and you have amassed the necessary funds to make a car purchase.

Part 4 of 4: Shop around and make a purchase

Step 1: Shop around again for the best price for the car you want. Once you have saved enough money to buy a new car – whether by making a down payment or paying the full amount – bear in mind that you may find a vehicle for less than you saved.

Take the time to shop around again and explore your options, instead of plopping down your savings for the first car that catches your eye.

Step 2: Research financing options. This same principle goes for choosing a financing option if you plan to make monthly payments after your deposit.

Interest rates vary, and you want to pay as little as possible for the privilege of paying off your car in increments.

As a general rule, a banking institution will charge less interest than a dealership itself, but that is not always the case. Check out multiple lenders before making a decision and signing a contract because, once you sign on the dotted line, you’re committed and your credit is on the line.

When it’s all said and done and you have the keys to your new car in hand, all of the budgeting sacrifices you made over the months will feel worth the effort. Additionally, you can apply your new skills at saving to future purchases or for retirement planning. You may even choose to continue applying the same monthly amount you put back for your new car into a savings plan now that you’ve adjusted to that budget.

Next Step

Schedule Oil Change

The most popular service booked by readers of this article is Oil Change. YourMechanic’s technicians bring the dealership to you by performing this job at your home or office 7-days a week between 7AM-9PM. We currently cover over 2,000 cities and have 100k+ 5-star reviews... LEARN MORE


The statements expressed above are only for informational purposes and should be independently verified. Please see our terms of service for more details

Recent Oil Change reviews

Excellent Rating


Rating Summary


33 years of experience
991 reviews
33 years of experience
Volkswagen Passat - Oil Change - Hampton, Virginia
Matt always does a great job. Very professional. I look forward to my next appointment.... A++++++
Ford Expedition - Oil Change - Hampton, Virginia
I am so please to have Matt work on my vehicle, he is very friendly and personable, and always does a great job.


22 years of experience
37 reviews
22 years of experience
Audi A3 - Oil Change - Queen Creek, Arizona
Job well done! Greg was on time and professional. He treated my vehicle with care. He completed the job smoothly and so far so good. First time using Your mechanic and it was a pleasant experience. I will be looking into them again. Thanks Greg!
Ford Explorer - Oil Change - Scottsdale, Arizona
Greg was very friendly and professional. Communication was great, he let me know what he was doing. He went above and beyond to make sure everything was running smoothly. I would 100% recommend Greg!


27 years of experience
93 reviews
27 years of experience
Buick Encore - Oil Change - Oakland, California
Another home run! Really appreciate the flexibility regarding my service appointment. Due to my work schedule I desperately needed a late appointment. So grateful my car is receiving top shelf professional service. Replaced a oil pan drain plug that was seriously damaged and stripped by a competitor that will NEVER get my business again! All services were quickly completed. Thank you so much for another great experience with my.... Your Mechanic Lavell 5 ⭐️ Service consistently.


23 years of experience
483 reviews
23 years of experience
Porsche 911 - Oil Change - Ponte Vedra Beach, Florida
Brian is extremely knowledgeable and very personable and has taken very good care on my 911. I would recommend Brian to any one who has mechanical car challenges. I would recommend Brian to all My friends and family

Need Help With Your Car?

Our certified mobile mechanics make house calls in over 2,000 U.S. cities. Fast, free online quotes for your car repair.


Related articles

How to Replace a Lost or Stolen Car Title in Hawaii
Once Once your car is paid off, the lender should mail you the physical title to the vehicle. This is proof that you own the car outright. However, many of us don’t take the proper care of that essential document....
How to Replace a Lost or Stolen Car Title in Illinois
Without Without a car title, you can’t sell your car, use it as a trade-in, or even register it in another state. Obviously, it’s important that you protect this document, but that’s harder than you might think. Too many people...
A Buyer’s Guide to the 2012 Lexus LS
With With a four-generation legacy spanning a quarter of a century, the Lexus LS may not be the riskiest, most cutting-edge vehicle in its class but its devotees don’t mind – the reliability, near perfection of design, and pronounced bent...

Related questions

is 2007 Lincoln MKZ a good buy for $1900 with that many miles on it? and will it last till 300,000 miles?

Hello. If you are getting that vehicle for only $1900 then that is a good deal. If the vehicle is well maintained then it should last for quite some time. I have had a lot of these vehicle last over...

How can I tell if the motor mount needs to be replaced?

Hello. This problem may or may not be detected visually—excessive engine movement may be seen while idling—or by feel—engine movement can cause contact with the chassis or something else on the car, which one can feel. The motor mounts on...

How do I break in the vehicle?

If you are purchasing your car new, you will need to break it in before you can drive it normally. The break in process lasts 600 miles, during which you should follow these guidelines: 1. Keep the engine operating between...

How can we help?

Our service team is available 7 days a week, Monday - Friday from 6 AM to 5 PM PST, Saturday - Sunday 7 AM - 4 PM PST.

1 (855) 347-2779 ·