Many people have car loans. In fact, approximately 107 million Americans own a car that they pay a note on.
Not only are car loans expensive, but they can also be avoided, even if you are on a low income. If you are looking for a vehicle now or soon, here are a few tips to help you pay cash for your next car.
Drive Your Old Car As Long As Possible
If you have a car already, drive it until you can’t drive it anymore (or until it doesn’t make sense to keep repairing it). Why buy a car you can’t afford when the one you have works just fine? Sometimes, you may be envious by the people driving new wheels, or the people who don’t have to manually roll up their windows. However, you have to remind yourself that it’s not worth getting into massive amounts of debt just to own a newer car.
If you don’t have a car yet, now is the time to act like you do. Start saving money as if you have a car note, insurance, and other miscellaneous things to pay for.
Save Each Paycheck
Even if it’s just a few dollars, save money from every paycheck in a new car fund. You can always increase this amount as you earn more or cut out expenses, but try to save something. It may take you a little longer to save enough money for a car, but it can be worth it when you realize you don’t have that extra bill hanging over your head every month.
Save Extra Money to Pay Cash For Your Next Car
Do you get bonuses, raises, or even birthday money? It should go straight into savings when you get it. It may be hard seeing that money sitting in your savings when you feel you deserve to spend it, but that extra money helps grow your savings faster.
For every bonus or raise you get, continue to save it and live off of the income you were making before. Before you know it, you’ll have a nice chunk of change to use for your next car purchase.
There is always a way to cut some spending in your budget, even if you don’t think so. Do you eat out a lot? Do you leave lights on when you can turn them off? Could you use an old phone instead of a new one? Finding ways to cut your spending can help you pay cash for your next car by offering you a way to save more.
I’m not saying you have to be drastic when it comes to cutting your spending, but I also think that short term sacrifice equals long term gain. If you really want to pay cash for your next car, you won’t mind making changes to do so.
Once you’ve saved enough money to pay cash for your next car, it’s time to go shopping. Since you know how much money you have to spend, now is the time to price shop from dealership to dealership (or online).
Finding a car in your budget can take some searching, but don’t give up. Plus, checking out cars in person may give you the opportunity to find a car that hasn’t been listed yet, and you may find yourself a good deal.
Check Out Sales
Some of the best times to buy a car are right before or after the new year, around the holidays (like Memorial Day), or the middle of summer (when everyone is on vacation). If you focus on buying your car during these times, you may be able to walk away with a better car for less money.
For example, I bought a car last year for $15,400. The car itself was fully loaded and had only been driven for a year before the owner decided to upgrade. My car was worth $24,000, but I snagged it on sale AND was able to barter because I was paying for it in cash.
Buy Gently Used
Just like I mentioned above, you can get really good deals on gently used cars. Sometimes, you are better off getting a car a little newer, because it will most likely still be under warranty and have less mileage than an older used car.
This helps you because you won’t have to worry about purchasing a clunker every couple of years, and you may not have to worry about too many repairs. This, in turn, can help you continue to pay cash for your next car.
Buy From a Private Seller
Private sellers can get a bad rep because of Craigslist horror stories and people not doing their research beforehand. However, you can get some of the best deals by buying from a person rather than a company. My sister bought her 2003 Pontiac Grand Am from a private seller for $1,200, and it’s still running like a champ.
The important thing is to surround yourself with knowledge about the car, come with your cash in hand to barter and make sure to test drive the car and think about it before making any decisions. You may just be able to find a diamond in the rough, all while paying cash.
It can be overwhelming trying to pay cash for your next car, but it doesn’t have to be. Keeping your goals in mind and knowing that you won’t have extra bills to pay can make it all worth it.