Save Money on Car Expenses

Piggy bank car driving on remote road
Photo: Colin Anderson / Getty Images

Owning a car is likely one of your largest personal expenses, and while it will always be one of the bigger expenditures on your personal budget, there are many ways to save big money on your car expenses. As with all personal finance, the more cost-saving measures you adopt now, the more money you'll save. While potential savings will vary widely depending on your personal situation, here are some of the best places to start saving money on your car expenses.

Save Money on New Car Purchases

Other than buying a house, new car purchases are some of the largest single transactions most people do on their own. Unfortunately, they are also some of the deals that are most often not made in the buyer's best interest. Before buying a new car, start by learning about the 5 biggest mistakes to avoid when buying a car. Once you've familiarized yourself with those common car-buying mistakes, check out these opportunities to save some money on the purchase:

Keep Your Car Longer

Not only does the cost of new cars rise each year, but cars depreciate quickly, and when you trade frequently, you lose money on low trade-in values. Buy a good quality car and keep it for five to seven years.

Potential Money Savings: $400 to $1,000/yr.

Go Small

When buying a new car, consider smaller models. They're often cheaper, and because they're lighter, they usually get better gasoline mileage. In addition, insurance is cheaper.

Potential Money Savings: $400 to $600/yr.

Check Fuel Efficiency

When buying a new car, consider the impact that various options have on fuel economy. For example, you sacrifice several miles per gallon when using air conditioning on the highway and even more in stop-and-go traffic; automatic transmissions get about 5 mpg less than manual transmissions.

Potential Money Savings: $400/yr or more.

Skip the Add-on Insurance

Don't buy credit life or credit disability insurance through your car dealer when purchasing a new car. Some dealers do a hard sell on these coverages, but they are highly overpriced, and if they're folded into your car loan, you not only end up paying 100% to 500% more than you should for the coverage, you also pay interest on it. Stick to regular life and disability insurance through your employer or an individual policy.

Potential Money Savings: $300 to $500.

Don't Get Talked Into the Extras

Be extremely wary of purchasing service contracts or extended warranties on new automobiles through your dealer. Many of them have very limited coverage (in spite of what the salesman may lead you to believe) and they cost much more than policies purchased directly from providers.

Potential Money Savings: $500 to $1,000.

Save Money on Car Maintenance

After the initial purchase, you have the cost of your monthly payment, auto insurance premiums, and gasoline to account for. If you follow our first piece of advice (buying a good quality vehicle and keeping it for several years), then you will undoubtedly also run into car maintenance expenses. But there are money-saving opportunities here, too:

Get Regular Tune-ups

Keep your car properly tuned. Tuning a badly out-of-tune vehicle can improve fuel efficiency by 4%. It's cheaper to pay the cost of a tune-up.

Potential Money Savings: $150 to $250/yr.

Stay on Top of Maintenance

Change the oil and oil filter in your car every 3,000 miles, regardless of how often your owner's manual recommends. More frequent oil changes are the single most important factor in extending the life of your engine, and will more than pay for themselves in savings on repairs and engine wear. 

Potential Money Savings: $500 to $3,000.

Change the Filters

Check your car's air filter monthly. A dirty filter shortens the engine's life and reduces gasoline mileage up to 10%. You can clean the filter by removing it and blowing it with an air hose, or you can replace it. 

Potential Money Savings: $130/yr or more.

Get the Right Tires

Use steel-belted radial tires and perform proper maintenance. Proper tire inflation and wheel alignment can improve fuel efficiency by up to one mile per gallon.

Potential Money Savings: $130/yr or more.

Use the Right Gas

Unless your car is knocking and pinging, don't use a higher octane gas than your owner's manual recommends. For most cars, premium gasoline offers no benefit. Unless your car has a high-performance engine and your manufacturer recommends a high-octane gas, use the less expensive gas. In 2020, premium gas cost 30% more on average than regular. 

Potential Money Savings: $200 to $400/yr.

Keep Your Tires Inflated Properly

Check your tire pressure regularly. You can lose up to 0.2% in gasoline mileage for every pound of under-inflation. 

Potential Money Savings: $140-400/yr.

Have Them Balanced, Too

Add thousands of miles to the life of your tires by having them balanced once a year. In addition to destroying the tread, improperly balanced tires can wear out your shock absorbers and damage your suspension system, leading to more expense. 

Potential Money Savings: $175 to $250/yr.

Peek Under the Hood

Check fluid levels regularly. Low battery water shortens your battery's life. Check coolant, automatic transmission fluid, and brake and clutch fluids. 

Potential Money Savings: $50 to $300/yr.

Save Money on Gas and Driving

While you certainly can't negotiate better gas prices the way you might negotiate the purchase price of a car, you can take steps to reduce your overall gas expenses. Many of our previous types will save you money at the gas station as they can make your car more fuel-efficient, but here are a few more things you can do to save:

Don't "Top Off the Tank" When Pumping Gas

Some of the gas may end up overflowing when it expands in the sun or if you park on a hill. 

Potential Money Savings: $20 to $53/yr.

Save Money Getting From Point A to Point B

In the end, there are costs associated with just getting from Point A to Point B. Here are a few tips for saving some money on driving expenses:

Carpool to Work

By sharing the driving with just one other person, you could save an average of $20/month or $200/year in gasoline alone if your commute is just 20 miles round-trip each day. Sharing the driving with two others increases your savings even more. Savings vary depending on the length of your commute. In addition to savings on gasoline, you'll save maintenance costs and wear and tear on your car. 

Potential Money Savings: $400 to $700/yr.

Be a Gas-Saver

Wasteful driving habits can double your fuel consumption. Develop gas-saving habits, such as: (1) always accelerate gently; (2) watch traffic ahead of you so you can anticipate slow-downs and avoid stops; (3) coast up to traffic jams by lifting your foot off the gas pedal instead of approaching at full speed and slamming on the brakes.

It takes 20% more gas to accelerate to normal speed from a full stop than it does from five miles per hour; (4) don't drive too fast or too slow. It takes 20% to 30% more gas to drive at 70 mph than 50 mph; (5) maintain a steady speed on the highway. Avoid getting stuck behind slow cars where you have to slow down to their pace and then speed up to pass.

Potential Money Savings: $390/yr.

Don't Warm Your Car Up by Letting It Idle

The engine warms up faster when driving than it does when idling, and idling wastes about a quarter to a half-gallon of gas every 60 minutes. 

Potential Money Savings: $90/yr.

Save Money on Car Insurance

Car insurance can be a major expense of owning a car, particularly if you have a less than perfect driving history and live in certain areas. Here are a few ways you can try to save some money on those insurance premiums:

Increase Your Deductible

Ask your insurance agent how much money you can save by raising the deductible on your auto collision insurance. Often, raising the deductible from $200 to $500 can save you 10% to 30% in premiums. If you have a good driving record, you could come out ahead. 

Potential Money Savings: $50 to $225/yr.

Get Discounts

Make sure you notify your insurance company of all the safety features that qualify you for discounts on auto or homeowner's insurance, such as automatic seatbelts or airbags in your car, smoke detectors in your home, etc. Non-smokers or non-drinkers can often get additional discounts. 

If you have a high school or college student under 25-years old in your household, ask about the good student discount for auto insurance. If your student qualifies, you could save 25%. 

Potential Money Savings: $50 to $100/yr.

Update Your Coverage

If you drive an older car, consider dropping collision and comprehensive coverage (don't drop liability coverage). Collision coverage is required if you have a car loan, but for older cars that you own free and clear, weigh the car's book value (what the insurance company would pay you if the car was totaled) against your collision premiums. If your car is over five years old or is worth less than $1,000, keeping collision and comprehensive coverage may not be worth what you're paying in insurance premiums. 

Potential Money Savings: $100 to $300/yr.

Do Your Research

Before buying a new car, ask your insurance agent whether the model you are considering will require a surcharge due to higher theft, damage, or repair costs. 

Potential Money Savings: $50 to $200/yr.

Compare Rates

Shop around for insurance. If you're getting good service from your company and are happy with the rates, you may want to stay with them, especially if you have had accidents or tickets. But if your record is good, shop around to see how much you can save, then decide if the savings are worth the switch.

Potential Money Savings: $50 to $200/yr.

Bundle Insurance

Consider combining your auto and homeowner's insurance under one policy. Many insurers give a discount for multiple policies. 

Potential Money Savings: $50 to $200/yr.

Drive Responsibly

Avoid tickets for speeding or moving violations. Many insurance companies give a discount of around 20% if you have not had an accident or ticket for three years or more.

Potential Money Savings: $100/yr or more.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Consumer Reports. "Fuel-Economy Face-Off: Driving With Windows Open or With A/C Running?"

  2. Consumer Reports. "Manual vs. Automatic Transmission: Save Money."

  3. U.S. Department of Energy. "Keeping Your Vehicle in Shape."

  4. Brookhaven National Laboratory. "Tips to Reducing Auto Air Pollution and Optimizing Gas Mileage."

  5. U.S. Energy Information Administration. "Weekly Retail Gasoline and Diesel Prices."

  6. New York State Department of Transportation. "Drive More Efficiently."

  7. U.S. Department of Energy. "Driving More Efficiently."

  8. State Farm. "Auto Insurance Discounts."

  9. Geico. "Car Insurance Discounts - Savings on Auto Insurance."

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