Everyone has a car loan. Around 84 percent of new vehicles are purchased with financing. But you’re not everyone. You want to know how to save for a car so you can pay for it in cash.

With a car loan, you’re paying 4-5 percent interest — or more — to purchase a depreciating asset. That means the bank and the car dealer are making money off of your loan as your vehicle is steadily losing value. In this situation, you’re not winning. Also, car loan payments can eat up a pretty big chunk of your budget. Let’s say you buy a $20,000 car and put $2,000 down. With a 48-month, 4 percent APR loan, you’re paying about $406 every month.

Here’s how to save for a car and be car loan-free.

Step 1: Identify your target.

So, what car are you hoping to buy? (Keep in mind that your dream car might have to wait.) Use an online resource like Edmunds.com to browse car reviews and get a sense of the current market value. “If you purchase a top-quality late model used car, such as a Lexus or another high-end model, your automobile will depreciate much slower than if you bought a new lower-end model,” The Simple Dollar advises.

Let’s say you’ve got your eye on a Ford Fusion SE. Brand new, it’ll cost you around $25,000. But you can pick up a year-old used model for around $16,000. That’s your target number.

Step 2. Figure out your timeline.

Coming up with $16,000 in six months is a stretch for most of us. But if you can give yourself two years, it’s totally doable. Ask your mechanic how long he thinks your current car can last. Once you have a car-purchase date in mind, use a budgeting tool like Mint.com to officially set your savings goal. Trust us, it’s super motivating to see a progress bar — especially when it turns red because you haven’t met your monthly savings target. Mint will tell you that you’ll need to save $667 per month if you want to have $16,000 two years from today, and will even help you set up a dedicated account.

Step 3. Identify big sacrifices.

Giving up your daily latte might help a little, but it won’t get you to your goal. Consider what big life changes you might be willing to make, such as:

• Getting a roommate. Ugh, you may think, especially if you prize your privacy. But can you deal with a roomie for just a year or two? Imagine cutting your rent or mortgage payment in half — you could save $500 or more per month right there.
• Start a side hustle. Instead of asking how to save for a car, consider how you could earn your car money. Here are 68 ideas for side hustles. Just do your research first. Driving for Uber, for instance, will put a lot of wear on your current car. And most people don’t earn much by selling for multi-level marketing companies.
• Quit eating out. If you use Mint.com to identify your biggest spending categories, you might be surprised by how much you spend at restaurants. Imposing a strict eat-at-home policy could save you $300 or more each month.

Step 4. Pursue small savings.

When it comes to saving for a car, the little things do matter. Consider:

• Switching to cheaper car insurance. You probably don’t realize how much money you could save on your car insurance. Compare.com gives you multiple free quotes in minutes, and you only have to enter your driver and car information one time. Do it!
• Changing Internet providers, or ditching cable. I just switched to a new provider in order to take advantage of a low rate for new customers, saving $40 per month for the first year.
• Keeping your phone longer. Yes, you want a shiny new phone. But every month you hang onto your old one is another $20 or so toward your car fund.
• Signing up for a program that invests your “spare change.” Apps like Acorns will automatically round up your purchases and invest the difference. These small amounts add up in a big way.

Step 5. Add extra money when you can.

Even after you’ve worked out a package of money-saving strategies to get you to your monthly goal, don’t stop there! If you get a windfall, such as a tax refund or a gift, add it to your savings. And if you succeed in paying off an old debt, such as a student loan, keep making the monthly payment to your car fund.

Step 6. Buy. That. Car.

You go to the dealership. You pick out the car you want. You negotiate a price. Then the saleswoman starts trying to sell you a loan. “I’m paying cash,” you say breezily, and you write a check. That car is all yours. It’s a good feeling.

Step 7. Keep saving.

“Wait!” you say. “I thought I was done!” Not yet. Keep that savings mindset (and don’t forget to compare auto insurance quotes for your new car.) If you can continue putting away $500 per month, in five years you’ll have $30,000. Now you can start thinking about that dream car.