How Much Money Should You Save Before Buying a Car?

Date: Oct 23, 2026

Aim to save a down payment of about 20% for a new car or about 10% for a used one, plus money for extra costs, if your budget allows. A smaller amount may still be workable.

What to Include

• Down payment: Reduces how much you borrow.
• Insurance, registration, and fees: These add to the first-year cost.
• Repair costs: Used cars may need repairs soon.

The 20/4/10 rule suggests 20% down, a loan of four years or less, and total monthly car costs under 10% of gross monthly income. The 10% includes insurance, fuel, and maintenance. But, it’s a guideline, not a rule.

A Practical Example

For an $8,000 used car:

• 10% down: $800
• Registration and fees: $300
• Repair cushion: $400
• Total to save: $1,500

At $75 a month, that takes 20 months.

Keep your emergency savings separate if you have them, so the car purchase does not leave you without a safety net.

Compare the full monthly cost, not only the loan payment, before you commit. And most importantly, choose a savings number that fits your situation.