Tip 22: Stop making car payments
Car payments are expensive and can be avoided. One way to eliminate car payments is to finish paying off your car and then keep driving it. Most cars will run for 10 years or more, so if you buy a new car with a 4 year car loan, you can drive it free for 6 years. During those 6 years with no car payments, you can save up and buy your next car with cash.
Another way to avoid car payments is to buy a used car that is not very expensive. I bought a 6 year old Honda Civic for $6,000 that ran great with no major repairs for 5 years. It is hard to beat a car that runs and is paid for!
The key is to find a reliable car that you will be able to drive for a long time. Some of the best vehicles I have had are cars that I bought at about 4 to 6 years old. I had a Ford Escort wagon that was a great car for years and then I sold it for $4,000. Another great car was my Honda Civic that I bought for $6,000, drove for 5 and a half years, and then sold for $3,500.
The most economical used car I ever bought was dangerous and I am lucky I didn't get hurt driving it. It was a 1983 Dodge Ram small pick-up truck that I bought from a guy living at a dump for $450. The back window was taken out and it had a home-made topper built on the back. I drove it for a couple years and then sold it for $1 to my brother-in-law.
I like to figure out the cost per year for driving a car to see how good a deal it was. For example, the Honda Civic works out to $450 per year. That is not much to pay for a vehicle. Buying a newer car makes it hard to work out to a low cost per year, even if you drive the car for many years. For example, if you buy a new car for $30,000 and drive it for 15 years, the cost per year would be $2,000 per year. If you find a used car for $8,000 and drive it for 8 years then the cost is $1,000 per year.
Try to drive a used car for a long time and get it paid off to save money. You’ll save on interest, face less vehicle depreciation, and be able to spend your car payment money on something else- or save it.
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