Saving Up for a Car: 6 Quick Tips

Car prices are at an all-time high. 

Thanks to the global pandemic, disruption in supply chains, and a shortage of computer chips, the demand for cars has outpaced the available supply. 

And prices have gone up. 

According to PBS, the average price of a new car totals $44,000, up $10,000 since March 2020. Worse yet, the average asking price of used cars sits at a shocking $30,000. 

As a result of these exorbitant prices, consumers desperate for a car are now paying thousands of dollars above the sticker price. In fact, recent studies found that over 40% of car shoppers are willing to pay $5,000 over MSRP

The question remains: how can you get the most bang for your buck in this difficult market?

Before you drive your next car off the lot, check out these six tips to help you save money:

1. List Your Non-Negotiables (& Do Your Research!)

In order to be a savvy shopper, you first need to know exactly what you’re looking for.
And in order to know what you’re looking for, you need to list out your “non-negotiables.”

These are the dealbreakers of the car shopping journey. 

It all starts with the right questions. For example…

Do you need room for a family of five?

Do you want a hybrid or electric vehicle?

Do you need all-wheel drive (AWD)? 

Do you need heated seats?

Start specific, and name the features your car absolutely needs to have. 

Such discipline will help you narrow down your search and save time. As a secondary benefit, such focus will shield you from alluring sales tactics designed to push products you don’t need.

In other words, once you know what you’re looking for, you’ll be able to get what you really want. 

P.S. To accelerate your automotive research, use sites like Edmunds, Consumer Reports, and Kelley Blue Book.

2. Know How Much You Can Afford

Here’s another important question: “how much car can I afford?”

Though this might seem like an arbitrary calculation, there’s a popular formula to help you out.

With the “20/4/10” rule, for example, experts advise spending 20% on the down payment of a four-year car loan, with 10% of your monthly take-home pay spent on recurring transportation expenses.

That 10% includes your monthly auto loan payment, car insurance, gas expenses, maintenance costs, and other incidentals. 

So let’s say your salary is $50,000 (after taxes, roughly $3,200 in monthly take home pay).

If you were to follow the 20/4/10 rule, your monthly transportation expenses should hover around $320 or less. 

While this is merely a guideline, it helps provide a structure to determine how much car you can afford. 

To zero in on your ideal budget, click here to use the Edmunds Car Affordability Calculator.

Note: As you shop around, remember that your car is a tool to get you from Point A to Point B. You don’t need the fanciest car on the lot. 

At least not right now. 

If the cost of one car prevents you from saving money, from establishing an emergency fund, or from paying down other debts, you may want to consider finding a cheaper alternative.

3. Know Your Financing Options 

There are two ways to finance a car: by either buying or by leasing. 

When you buy a car — typically through obtaining a loan — you’ll need to make a substantial down payment. Over time, however, you’ll build equity in the vehicle until it becomes an asset.

In other words, when you buy a car, you put yourself on a trajectory to owning it. 

Conversely, leasing a vehicle is essentially an extended rental. You won’t own the car at the end of your lease term and will instead be expected to return it. 

Leases are popular because they feature lower monthly payments and reduced up-front costs. While mileage limits were previously seen as a drawback to leasing, our increasingly-remote economy makes leasing even more appealing. 

In the long run, however, leasing typically costs more than buying. After all, when you buy a car, you’ll eventually own it. 

When you lease, you’ll perpetually make monthly payments, especially if you continually lease one car after another. 

Be sure to carefully weigh the pros and cons of buying and leasing.

4.  Clean Up Your Credit Report 

Before you shop for a car loan, make sure your credit report is as clean as possible. 

The better your credit score, the better your loan terms will be. 

Start here: request a free copy of your credit report

Then, carefully comb through it to identify any errors. If you do find any flaws, be sure to follow the Federal Trade Commission’s reporting procedure to clean up your credit. 

Next, look for any items in collections that you can pay down or settle. This might be a pesky medical bill, or an erroneous charge you’ve been disputing for ages (but haven’t eliminated). 

As you shop around for a car (and a loan), try not to get overextended on your credit cards. 

Aim to borrow less than 30% of your available credit. 

If you can stay under 30%, you’ll boost your FICO® score. 

Finally, be sure to pay your bills on time. Payment history accounts for 35% of your FICO® score, so the more you pay on time, the better your loan terms will be. 

Practice each of these habits in the weeks and months leading up to your purchase.

5. Consider Pre-Approval for an Auto Loan

Knowledge is power, especially when it comes to obtaining car loans. 

While it might seem logical (and convenient) to inquire about a loan at a dealership, that can be a recipe for overspending. 

In many cases, dealership interest rates are far higher than competing banks and credit unions.

So do your research and get multiple rates before you move forward.

Then, make sure to get “pre-approved.” This is when a lender reviews your credit report and then provides your exact loan amount, rate, and terms before you go to the dealership. 

Pre-approval will not only help secure the best interest rate possible, but it will also give you leverage at the dealership.

6. Have Money Left Over For Extra Fees

There’s one more thing we need to mention: get ready for fees

When you buy a car, you can get hit with a handful of unexpected dealer fees that can cost between 8% to 10% of a car’s total price.

These extra expenses often include:

  • Title and registration fees
  • Destination fees
  • Documentation fees
  • Inspection fees
  • Extended warranty fees
  • Tire-and-wheel protection
  • And many more

Fortunately, many fees for a new car can be negotiated. And if you decide to buy a used vehicle, each of these costs will be considerably smaller.

Whichever path you choose to follow, be sure to have extra money available to absorb these closing costs. 

Driving Forward

You deserve to stretch the value of every dollar as far as possible. 

At Flyp, we’re focused on helping you level up in every area of your financial life. 

That’s why we built our game-changing App: to provide amazing benefits that reward you as you travel down your financial journey. No credit check, no hidden fees, and a gamified experience that makes finances fun.

With the Flyp Debit Card*, you can get up to 110% cash back on purchases – plus tons of other awesome rewards to help sweeten the pot.

Ready to get started? Click below to download the app!

               Let’s Go

Flyp is not a bank. Banking services are provided by Sutton Bank, member FDIC. The Flyp Classic Debit Card is issued by Sutton Bank, pursuant to a license from Visa U.S.A. Inc. Visa is a registered trademark of Visa, U.S.A. Inc. All other trademarks and service marks belong to their respective owners. Read the Flyp Rewards Official Terms before participating. No account opening or payment is necessary to enter or win. See Terms for ways to enter.

All information provided by Flyp is believed to be accurate at the time of publishing.


PBS. “Prices for new and used cars skyrocket leading up to the holidays.” PBS, December 19, 2021. 

Blanco, Sebastian. “40% of Car Shoppers Willing to Pay $5000 over MSRP for a New Car.” Car and Driver. Car and Drive, May 15, 2021. 

Irby, Layota. “20/4/10 Rule of Thumb for Car Buying.” The Balance. The Balance, April 3, 2022. 

Jones, Jenn. “Dealer Fees to Watch Out for When Buying a Car.” Lending Tree. Lending Tree, September 20, 2021.