For most people the need to buy a car is one of the most engaging financial decisions in their lives. When it comes time to buy a car, emotions run the gamut from excitement at the prospect of buying an automobile to serious questions about how to save money on a car purchase—not to mention how to pay for it.
The Cost of Buying an Automobile
One of the biggest drains on the average family pocket book is the automobile. It is not just the cost of gasoline, the hot topic of our day, it is also the cost of buying an automobile. And, every time you think about buying a car you find that prices have increased (more than a little).
Just as with other major purchases, a home in particular, one of the big parts of buying an automobile is financing the purchase. Depending on how long a time period and the rate of interest, this can amount to a great deal of money.
However, it is entirely possible to drive a reasonably new, quality car and never borrow to do it, even if you are starting with little or no money. How to do that is the primary focus of this article.
How to Buy a Car With Cash
Here is a plan I learned about many years ago, and I don’t think I have heard of a better one yet, for moving up to a much better car without borrowing no matter where you start.
First figure out how much you could pay if you did borrow to buy your car. Say that you figure $300.00 a month. Now, instead of buying a car today, start saving that amount of money each month and do it for at least six months. If you can go ten months or a year, so much the better.
Now you have $1,800-3,600 in the bank. You go to the dealer and say, “I’ve got $3,000 (or whatever you have) here and I want to trade cars. What can you sell me for not one penny more than this—all costs included?”
The price must include tax, license and all. Get the best deal you can, but don’t go over your available cash a dime. This will probably not enable you to buy the car you want, but that's OK. This is only the first step.
Plan to Buy a Newer Car with Cash
Now, keep setting aside that same amount each month (saving) until you can do the same thing again. Then do it again. And then again.
Before you know it you will be driving a late model car, but without ever borrowing money to buy a car. Unlike your friends, you will be driving a debt free car—and enjoying it immensely.
When you get up to driving a three-five year old car stop buying newer and keep buying cars about three years old. This is the best deal cost wise. The best plan, financially, is to buy a three year old car and drive it for about five years. Once you get to that range you can adjust down the amount you need to buy once each five years.
Enjoy Buying Your Next Car With Cash
Buying cars can keep you poor if you let it. This sensible plan shows you how to buy a car with cash and keep you driving nice automobiles without the burden of debt. As someone who does it and hasn’t had a car payment for many years I can tell you it is a terrific way buy a car.
