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Bottom Line Up Front 

  • Do your research. Compare car features and prices on both new and used vehicles.
  • Review your budget and decide how much you need to save.
  • Set up automatic deposits to your savings account.

Are you dreaming of your next set of wheels but not sure where to start? Planning ahead can set you up for success and help you stay within your budget when it’s time to buy.

Start Here

  1. Evaluate your needs. Create a list of your top priorities for your new vehicle, such as safety, reliability, fuel efficiency, passenger seating and cargo space. Be realistic when sorting out your needs vs. wants. You might be tempted to consider a luxury model, but consider if it make sense for your budget to pay more for the high-end finishes. It’s important to think about functionality and how you plan to use the vehicle. Remember to consider how your needs could change in the future, too.
  2. Compare new vs. used. Since the value of a new car depreciates significantly in the first year, you can save money by shopping for a used vehicle instead of a new one. You might look for a car that’s 2-3 years old to get affordable modern features but not the potential repairs that an older car could need. Use our New vs. Used Car Calculator to see which may be best for you and your budget.
  3. Research car prices. Look up car prices to get a general idea of what you might expect to pay for the vehicle you want. Kelley Blue Book can help you determine fair prices in your area.
  4. Look up trade-in and market values. If you’re intending to trade or sell your car, it helps to know what it’s worth before walking into the dealership. Whether you own the car outright or are still paying off a loan, see how much you’ll have to offset the cost of your next vehicle.
  5. Calculate extra costs. Be sure to consider all other expenses that come with buying a car— including dealer fees, sales tax, auto registration and title fees, and potentially a warranty or maintenance plan. Build those into your anticipated costs alongside the cost of car insurance.
  6. Review your budget. Do the math to figure out your monthly cash flow (subtract your basic monthly expenses from your income) and see how much of a car payment you can afford. Use our Car Affordability Calculator to see how much you’ll need to save.
  7. Set your savings goal. Perhaps you’re hoping to save enough money to pay cash for your next vehicle, or maybe you’d like to save for a down payment to reduce the amount you need to borrow. Financial experts often recommend a 10% down payment for a used car or a 20% down payment for a new car. For example, you might aim for a $2,000 down payment when buying a $20,000 used car, or a $7,000 down payment for a $35,000 new car. Any amount you save will lower your monthly payment.
  8. Determine your time frame. Are you planning to save up for a few months or a few years? If you have time on your side, take advantage of the opportunity to plan ahead and decide how much you’ll need to save each month to reach your savings goal.
  9. Automate your savings. This is one of the most important steps and a great way to stick to your savings plan. Once you have a savings goal in mind, set up automatic transfers into your savings every month. You might want to designate a special savings account for your car purchase so you’re not tempted to dip into it for other expenses.

Need Help With Next Steps?

From strategies to help you save to auto loans with great rates, Navy Federal Credit Union can help you navigate the car-buying process.


This article is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.