Making weekly (or bi-weekly) car payments is often better because it leads to paying off your loan faster and saving on total interest by effectively making one extra monthly payment a year (26 half-payments = 13 full payments). This works best with simple interest loans where payments are applied quickly, but you must confirm with your lender and ensure it aligns with your budget to avoid financial strain or issues with pre-computed loans.
The 50/30/20 rule is a simple budget guideline: 50% of your after-tax income for needs (like housing, groceries, and car payments/expenses), 30% for wants (dining out, entertainment), and 20% for savings and debt repayment. For a car payment, this means your total monthly car expenses (loan, insurance, gas, maintenance) should ideally fit within the 50% "Needs" category, with some experts suggesting car costs shouldn't exceed 10-15% of your income overall, making a modest car a "need" and luxury vehicles a "want".
Weekly repayments are calculated at a lower rate because you're contributing more frequently to the principal amount, which reduces the interest charged. You also effectively pay more repayments per year with weekly than monthly. Over the life of the loan, this can save you money.
Dave Ramsey's core car rules emphasize paying cash, avoiding new cars (unless you're a millionaire), keeping your total vehicle value under half your annual income, and using a strict budget, often suggesting the 20/4/10 rule (20% down, 4-year loan, 10% total car expenses) as a guideline if financing, but preferring no debt at all to avoid depreciating assets trapping you. He stresses buying reliable, used vehicles to prevent debt and build wealth.
"I'm Going to Pay Cash!"
If they know you have a specific budget, they also know they won't be able to move you up to a more expensive, profitable model. So if the salesperson asks about financing, just say you're undecided.
For years, dealerships have been using a tactic called a “four square”—a sheet of paper divided into four boxes where the salesperson will write down your trade value, the purchase price of the vehicle you're buying, your down payment, and your monthly payment.
Increasing Your Payment Frequency
You can save interest by increasing your mortgage payment frequency. When you select an accelerated weekly or bi-weekly payment option, you are essentially making the equivalent of one additional monthly payment each year which will help pay off your mortgage faster.
Generally, yes. But not always. Depending on your loan term and amount, paying it off ahead of schedule can save you money on interest and free up room in your monthly budget. But in some cases, it may not be the most strategic move.
Yes, biweekly payments save money by adding one extra payment each year. Instead of 12 full payments, you'll make 26 half-payments – the equivalent of 13 full payments. That accelerates payoff and cuts down on interest.
Input a monthly payment amount
Take-home pay is the amount you make each month after taxes, so if you bring home $3,000 monthly after taxes are deducted, it's likely you can comfortably afford a $300 car payment.
Yes, car interest rates saw a gradual decline through 2025, influenced by Federal Reserve rate cuts, with modest decreases seen by year-end, though significant drops were not expected immediately; strong credit scores yielded better rates, while those with poor credit saw less relief, with expectations for slow improvement into 2026.
Paying cash may hinder your chances of getting the best deal
"When dealers are negotiating the purchase price, they anticipate making money on the back end, via financing," Bill explains. "So if you tell them up front you're paying cash, the dealer knows he has no opportunity to make money off you from financing.
A little preparation, and knowing some of the common car dealer tricks used by salespeople, can help you close on a car with confidence.
The best way to finance a car involves getting preapproved from a bank or credit union before visiting the dealership to compare rates, making a significant down payment (15-20% is ideal), keeping loan terms shorter (around 48-60 months), and negotiating the total car price separately from the financing, allowing you to get a lower interest rate and save money long-term. Leasing or other options like PCP/HP exist, but a direct loan with good credit offers the most equity.
Depreciation. Cars reportedly lose 20% of their value in the first year of ownership and retain just 40% of their original value after five years. Clearly, that is not a good investment. “Your goal should be to buy the least expensive car. Period,” said Orman. “That should steer you to a used car rather than a new car. ...
Beyond the monthly payment, you'll also face years of variable expenses like car insurance, gas, maintenance and taxes, which can spike without warning. By considering these costs before buying a new or used car, you'll be better prepared for the financial ups and downs of hidden car ownership costs.