How to Save for Your First Car

Buy and Borrow

July 16, 2024

Your first car is an exciting life milestone, so congratulations! As you prepare for your car-buying journey, saving money is a must.

Saving For Your First Car | Spencer the Influencer

Here is a guide to help you prepare for buying your first car in three simple steps.

Step One: Determine All Your Costs

To buy a car, there are a number of costs that come along with it. If you’re buying the car straight-out, you’ll need enough to pay for the entire vehicle. If you plan on getting a car loan, you’ll need a down payment to start with, and monthly car payments until you pay off the car.

You will also need car insurance, gas money, and money for car maintenance like oil changes and tires. If you’re paying for all of it yourself, make sure you have enough money coming in to cover everything you’ll need after the purchase.

If a family member is helping you out, sit down and talk through the specifics of what they’re covering and what you’re covering so you can make a plan that fits with your budget.

A woman speaking on the phone and looking at a tablet

Step Two: Create a Budget and Start Saving

Once you know your costs, use that to create a budget for your new car. Make it specific for your needs, like saving up for a particular amount to cover your down payment. Then you can make a plan to save the money you need.

There are many ways to save money for your first car. Working extra shifts or cutting down on unnecessary purchases can put a little extra money in your pocket. But you also want to make sure you’re making the most of every dollar you deposit.

Opening a separate savings account to save for your first car can help. It keeps your car funds separate from your spending money, but it can also help you reach your goal faster.

How? Simply choose a savings account with a higher annual percent yield (APY). This helps you earn more returns on every dollar you save so you can get behind that wheel faster!

Step Three: Get Pre-approved

After saving the money you need, it’s time to get pre-approved. Auto loan pre-approval makes car shopping much easier.

Pre-approval lets you decide which financial institution has the right auto loan for you. You can find lower interest rates with a lender you already trust. Plus, walk into the car dealership with a check in hand, so you already know exactly what you have to spend. This helps for shopping online too!

Pre-approved car loans also give you an advantage for saving money during the car buying process because you and the salesperson don’t have to go back and forth about the monthly payment. You can focus only on the price of the car, which could help you get a better price.

Get pre-approved and get ready to smile for the camera in front of your very first car!