Shopping for a new car is a lot of fun until you get to the money part. That’s when you have to figure out how much you can afford to spend each month if you’re taking out a loan.

Or maybe you’re planning to use cash because your credit score is too low to get a personal loan. And there’s also a possibility that you’d prefer to avoid monthly payments altogether. Either way, you’ll need cash to cover the cost of the vehicle, along with the fees for taxes, tag and registration, and title transfers.

Whether you only need enough for a down payment or plan on paying cash, here’s how to save enough dough for your new ride:

Shop Around for a Loan

If you’re paying cash for your new car, you can skip this step. But if you’re planning to take out a loan, it’s a good idea to shop around for a loan to determine how much money you must bring to the table for a down payment.

Depending on the amount you’re qualified for and your credit history, there’s a possibility the lender won’t require any money down. Keep in mind that even if they don’t it doesn’t hurt to allocate funds towards your new car purchase to lower the amount financed, which reduces how much you’ll pay in interest.

Run the Numbers

Whether you’re financing or paying cash, you need to know how much money you need to save to buy a car. As mentioned earlier, you’ll need to focus on the down payment if you intend to borrow to make the purchase. It’s also a good idea to compare loan offers to see how much of a car you can afford each month without blowing up your budget.

Paying cash? Even better, but you still want to peruse all the options out there to gauge how much your top selections cost and nail down a price range. And don’t forget the add-ons, like tax, tag, title, and registration fees.

Another factor when running the numbers: the value of your current ride. What’s the expected trade-in or resale value? Subtract this amount from the total purchase price if you’re paying cash and include it as a part of the down payment if financing.

Set a Goal

Now that you know exactly how much cash you need to make your dreams of buying a new car a reality, it’s time to set a timeline for your goal. Why so? It’s one thing to tell yourself that you will save up for a new car but it’s another to create a plan of action with a hard deadline to hold yourself accountable.

Scenario 1: Cash Purchase

• Purchase price (including tax, title, and registration): $12,000
• Timeline: 10 months
• Savings Goal: $1,200 per month

Scenario 2: Financing

• Loan amount (including tax, title, and registration): $20,000
• Timeline: 6 months
• Desired Down Payment: $3,000
• Savings Goal: $500 per month

Quick note: It’s not enough to run the numbers and set a savings goal. Work this amount into your spending plan or identify ways to earn more money until you reach the finish line.

Make Budget Cuts

To piggyback off the last point, the easiest way to save up for a new car is to adjust your spending plan. Don’t have a budget or maybe your budget isn’t working out? You’ll want to start from scratch and draft up a plan that will work so you can avoid overspending and meet your savings goals each month.

Another tip: Place saving for a new car at the top of your list of expenses and set up a separate savings account to house the funds. That way, when funds hit your account, you can transfer the amount you’re saving for the car right away before you spend it on something else. And when you make saving a priority, you’ll feel empowered to keep moving forward when you see the results you desire.

Your list of expenses should look a little something like this:

• Giving (if applicable)
• Saving
  • Financial Goal 1: New Car with no auto loan
  • Financial Goal 2: Emergency Fund, etc.
• Necessities
  • Household: rent or mortgage, utilities, telephone, cable, internet
  • Food: groceries
  • Transportation: car payment, public transportation, gasoline, insurance
  • Other: cell phone, health and life insurance, debt, personal items, childcare, pet care
• Wants
  • Dining out, entertainment, subscriptions

A few ideas to cut back on expenses until you reach your savings goal:

• Reduce your utility usage by only using lights, televisions, and fans in rooms that are occupied.
• Consume the most energy during off-peak periods to lower electric costs.
• Bundle up your home telephone, cable, and internet service to get the best rate, and shop around for cheaper options.
• Consider cutting the cord on cable and using a live-streaming service.
• Plan out your meals based on sale items and only include these items on your grocery list.
• Cook generous portions so you’ll have enough for leftovers.
• Catch happy hour deals or “kids eat free” night when dining out.
• Consolidate your route to and from work by weaving in errands and other appointments.
• Use the GasBuddy app to find the cheapest gas prices.
• Consider increasing your insurance deductible to reduce the monthly premiums (but only if you have the cash on hand just in case you need to file a claim).
• Review your cell phone plan and either ditch some extras or go with a cheaper plan offered by another provider.
• Review your health and life insurance policies to ensure you’re getting the best deal.
• Reach out to creditors to see if more competitive interest rates are available to you.
• Ditch magazine subscriptions and read the articles online.

Earn More

Prefer not to adjust your spending plan? You can also explore ways to earn more and use the income solely for your new car purchase. Some ideas to get you started:

Second Job

If you’re not too burned out from your full-time job, picking up a second job that isn’t too strenuous shouldn’t be a heavy lift. Peruse opportunities in your current industry to avoid the learning curve, or you can consider jobs with minimal barriers to entry.

Side Hustles

There are several money-making opportunities out there, but a quick Google search will yield a laundry list of results. If you’re not interested in side hustles like Uber, Lyft, or Postmates, check Craigslist for odd jobs. Still no luck? Identify the top industries you’d like to work in, type “(industry name + side hustle)” into the Google search bar, and start there.

Freelance Work

What do people say you’re good that? Are you a master landscaper, babysitter, dog walker, writer, or organizer, just to name a few? Put these creative talents to use by offering your services on a freelance basis. You’d be surprised at how much you could earn by spreading the word.

Also, consider putting up a website, having business cards printed, and posting about your business on social media. The more that know what you’re up to, the better. And if you enjoy freelancing, you could continue on even after you buy your new car to knock other financial goals out of the park.

Overtime at Work

Does your employer offer overtime opportunities? Jump on the wagon right away and notify your supervisor you’re interested in all future overtime they offer. That way, you’ll be on their radar each time they need workers to stay late or come in on off days.

Use Financial Windfalls Wisely

The next time you receive an unexpected influx of cash, allocate the funds towards your new car fund. Depending on how much it is, you could very well knock your goal out of the park with just one deposit.

Financial windfalls include work bonuses, tax refunds, monetary gifts, and inheritances. And while it may be tempting to treat yourself using a portion of the funds, keep your eyes on the prize.  

Sell Some Stuff

This is one of the more simple ways to kill two birds with one stone. Not only will you be clearing the clutter in your home, but you’ll also earn some extra dough in the progress.

Purge ruthlessly and don’t look back. If a fixture has been sitting on the kitchen counter collecting dust for several years, it has to go. And for all those clothes and shoes hanging out in the closet that’ll never get worn, kiss them goodbye.

Don’t know where to sell your goods? Consider having a yard sale or posting the items to Craigslist or the Facebook marketplace. You could even try your hand at eBay if you have a ton of electronics. And consignment shops aren’t a bad idea for your apparel and footwear.

Automate your Savings

Have you considered automating your savings to reduce the chances of spending the stash you’ve worked so hard to build up to buy a car? Whether you opened a separate account just for car savings or you’re using an existing savings account, it’s a good idea to set up automatic transfers so earnings leave your checking account the moment they arrive.

You can schedule withdrawals manually each time you sit down to draft up your spending plan. Or you can reach out to your employer and update your direct deposit routing information so your earnings will route to two destinations.

Only Use Cash

As the old saying goes, once you break a $100 bill, you may as well kiss it goodbye because what’s left will be gone in a flash. But there’s an upside. By using cash, whether it’s a $100 bill or $20 bill, you get to see how fast money goes when you don’t budget and spend it wisely. And when you whip out your debit card for everything, that’s even worse as there’s no real accountability until you check your bank account.

So, while you’re saving up for a new car, only use cash for purchases made with your disposable income. Since the magic plastic is off limits, you’ll eventually slow down on the spending as there’s no safety net. Even better, you won’t blow up your budget and be forced to dip into your savings.

Keep The Change

Feeling brave? If you want to save even more money, keep the change and stow it away each time you make a purchase. Doing so is tough but will get you to your savings goals even faster. That means if you whip out a $20 and your dinner is only $15, you’ll stash $5 away.

Create a Savings Challenge

Have you heard of the 52-week savings challenge? It’s designed to help you save $1,378 in a 12-month period by depositing a $1 in week one, $2 in week two, $3 in week three, and so on until you get to week 52. But maybe you need a lot more than this amount or would like to cut this time in half.

No problem at all. Use this same concept but tailor it to your unique needs. It may take a few to sort out the math, but it’s guaranteed to make saving far more exciting and you’ll see progress right away.

Scenario 1: $2,000 for a Down Payment in Three Months

• Weeks 1-4: $100 per week (Total Savings: $400)
• Weeks 5-8: $150 per week (Total Savings: $600)
• Weeks 9-10: $225 per week (Total Savings: $450)
• Weeks 11-12: $275 per week (Total Savings: $550)

Scenario 2: $6,000 for a Cash Purchase in Six Months

• Month 1: $500 ($125 per week)
• Month 2: $750 ($187.50 per week)
• Month 3: $1,000 ($250 per week)
• Month 4: $1,500 ($375 per week)
• Month 5: $1,750 ($437.50 per week)
• Month 6: $500 ($125 per week)

These scenarios may seem far-fetched if you only make budget cuts, so strongly consider additional income opportunities for more aggressive savings goals.

The Bottom Line

Saving up enough money for a new car may seem like a doozy which is why you want to make it fun and reward yourself. Remember those milestones you set earlier? When you reach them, take some time out to celebrate and treat yourself (in moderation). Most importantly, keep your eyes on the prize and that new car will be yours in no time.