How to save for a car: amount, timeline and running costs
You buy a car once and pay for it every month. It is worth saving with both numbers in mind.
In short
To save for a car, set the price and add registration, taxes and insurance, then divide the total by the months until you buy — that is your monthly saving. For example, 12 000 over two years is 500 a month. Work out the running costs in advance: fuel, insurance, maintenance, registration and parking. If the monthly running cost does not fit your budget, a cheaper car beats saving for longer.
A car is one of the most common big goals and one of the trickiest. The price in the listing is only the start: after you buy it, the car costs money every month, and that is worth knowing before you start saving.
Step 1. The full amount
Price
Of the car you chose
New or used
Taxes and registration
Fees and paperwork
A few percent more
Insurance
The first year
Often paid upfront
Example: a used car for 11 000, with taxes, registration and the first insurance payment around 1 000. Goal: 12 000.
Step 2. How much to save each month
1 year
12 000
1 000 a month
2 years
12 000
500 a month
3 years
12 000
334 a month
Choose the timeline where the monthly amount does not push you onto a credit card at the end of the month. The arithmetic for big purchases: how much to save each month for a big purchase.
Step 3. Work out the running costs before you buy
Fuel
Depends on mileage
The most visible cost
Maintenance
Oil, tyres, repairs
Set it aside monthly
Insurance and registration
Yearly
Divide by twelve
Parking and washing
The small stuff
That adds up
Add these up for a year and divide by twelve: that is what the car costs per month. If it is more than you spend on transport now, the difference has to come from the budget before you buy. A good test: while you save, also set aside the future monthly running cost. That shows whether your budget can carry it.
Save or borrow
A loan lets you buy sooner, but while you pay, the car loses value and the interest does not. Saving at least half the price means less interest and less dependence on your income over the next few years. If you do borrow, check how it changes your debt-to-income ratio.
On a low income
Then it matters to start with an inexpensive used car and an emergency fund: the first big repair should not land on a credit card. Emergency fund, then how to save on a low income.
What it looks like in the app
In Caudal create a goal called "Car" with an amount and a date: the app works out how much to set aside each month and recalculates it after every contribution. You can add a photo of the model — a goal you can see is dropped less often. If the car is one of several big purchases you are planning, add them all to the Wishlist with their months: the app shows which months need more than you usually have left and suggests what to move. Once you own the car, create a category for it with subcategories — fuel, maintenance, insurance — and a monthly limit, so you can see what it really costs.
Common questions
- How much should I save each month for a car?
- Divide the full amount — price, taxes, registration and first insurance — by the months until you buy. For example, 12 000 over two years is 500 a month; over three years, 334.
- Is it better to save for a car or take out a loan?
- Saving usually costs less: there is no interest and the car loses value from day one. If you need a loan, save at least part of the price — it lowers both the interest and the monthly payment.
- What does a car cost apart from the price?
- Taxes, registration and insurance when you buy, then every month fuel, maintenance, repairs, parking and washing. Add up a year and divide by twelve to see the real monthly cost.
Try it on your own money
Caudal is an expense tracker in Spanish, English and Russian. Several currencies, goals, debts, a shared household budget. Recording an expense takes three seconds.
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