Tips on Saving Money for a New Car

Whether you’re trying to save for your first car or you're just looking for the best way to save up for a new car, we go over the essentials of how you can save for a car quickly, the best ways to save up for a car, and whether you should save or finance.

How much should you save before getting a car

Because of the effects of the coronavirus pandemic and the microchip shortage, used car prices are currently very high, meaning that the release of new cars has been delayed, and people are holding onto their current ones. As a result, car dealerships have fewer used cars available for purchase, resulting in a stock shortage, driving up used car prices.

 You’ll need to consider the general price of the car you’re looking at buying; not only the cost of the car itself but also the maintenance costs associated with it, such as tax, insurance, etc.

You also need to look at your monthly income and outgoings, and consider how much you can realistically put aside per month so you can still comfortably get by.

Lastly, you need to decide if you’re just saving for a deposit, or if you’re aiming to pay for the full amount of the car.

How many months does it take to save for a car

This depends on how quickly you need to save for the car, and how expensive the car is that you’re looking to buy.

You can use a savings goal calculator, where you can put a date you’d like to have a certain amount saved by, and it’ll estimate how much you need to be saving per month or day. 

What's the best way to save up for a car

The best way to save up for a car is to set up a savings account. You can use comparison websites such as Money Saving Expert to find out which savings accounts are currently offering the best interest rates, and we recommend opting for a savings account that limits the number of withdrawals you can make, as these typically offer higher interest rates. 

Should I save for a car or finance

If you want to buy a car on finance, putting down as large a deposit as possible can significantly reduce the monthly payments you'll have to make. It will also shorten the number of months you will have to pay finance for.

However, saving to purchase your car outright can save you from potentially high interest rates on finance loans.

If you believe you can afford and keep up with the monthly payments that come with financing a car, saving up for a large down payment may help you save money in the long run by avoiding interest on a large portion of the car's price.