How to Have a Car Without a Car Payment

How to Have a Car without a Car Payment


          Wouldn’t it be nice to NOT have a car payment ever again?  Impossible?  Not really.  I haven’t had a car payment in over ten years; I promise, I’m not driving a nasty old beater car either!  When I became serious about being debt free, that meant I didn’t want a car payment.  My husband, Nick, has always paid cash for his cars, and that was one of the things I admired about him when we were dating.  He had the discipline to save up and pay for the things he wanted – including his vehicles.

            The last car I had with a payment was a Toyota Camry that my godfather sold me.  It was definitely nice of him to let me make payments directly to him instead of having to go the bank financing route.  Since I worked for him at the time, he knew where to find me if I was late on a payment!  😉  Once my Honda was paid off, I could have traded it in and got myself into a new car with a hefty payment.  But I decided that I was finished with that way of living!  Instead, I continued to drive my paid-for car and began piling money into my “New Car Fund” savings account.

            After two years, I had piled up $14,000 in cash and had my eye on a 2005 Hyundai Sonata.  I loved the Jaguar-like styling of the Sonata and the 2006 models were just released, so I knew I could score a deal on the 2005’s that the dealers would surely be trying to get off of their lot to make room for the new model.  I actually had all kinds of fun negotiating a deal on my Hyundai.  Because I had cash and my Toyota was still running fine, I wasn’t about to be pressured into a deal that wasn’t for me.  After the deal was done, the salesman complained that I negotiated down so much that his family was going to have to eat Ramen noodles for the next month.  (Car salesmen can be so dramatic!)  Nick took over driving the Honda because it was worth more to us than the dealer wanted to give for a trade, which is not uncommon.

          I am still driving my 2005 Sonata, almost nine years later!  I’ve taken great care of it and it only has 86,000 miles on it.  I have plenty of money of piled up in my “New Car Fund” but I’m just not ready to make a deal on a new Sonata yet.  Maybe in August or September when the 2015 model comes out, I’ll be poised to make another sweet deal on a 2014.

          “Well, that’s nice for you,” you might be saying. “But what if I have a car payment right now? How do I get to the point of being able to buy a car without a payment?”  First, make a plan to pay extra on your principal so that your car is paid off ASAP!  Once it’s paid off, take that car payment and put it in your “New Car Fund” savings account.

          The average car payment is $450 per month, which is $5,400 per year.  Even if you have some repairs to your paid-for vehicle, you should still be able to sock away $5k per year.  After one year, you could sell or trade in your paid-for car, add the proceeds to the $5,000 and buy a decent used car for cash.  You can continue to do that year after year, upgrading cars with the cash you’ve saved instead of having a car payment!

          With a little patience and discipline, you too can have a car without a car payment.  Do you have a car loan or lease payment right now?