Would you like to know how to pay cash for your next car, and never take a car loan again?
This is something I have seen so many of my family, friends, and co-workers struggle with over the years, and it just blows my mind. I have taken two car loans in my lifetime ($15,000 and $18,000).
In both cases, I paid the loan off within about 1 to 1.5 years because I can’t stand to be in debt. My point is that, if I could afford to do that, I had no business taking the loans to begin with (and neither do you!).
I am going to share a car savings plan which will enable you to pay cash for your next car and never take a car loan again:
- If you currently have a car on an auto loan, you need to do two things: (1) Pay off the loan and (2) KEEP your car! That’s right. Just keep the darned thing, and pay it off. (This part will take longer for some folks, and this post is not about how to pay off your current car. I will make another post covering this topic, if there is enough interest. But all plan variants will boil down to having patience in using the same “boring” car, and sticking to an aggressive payment plan.)
- Save $300 a month for 36 months which will leave you with $10,800.
- If you sell your current car for $1,000 to $3,000, you’ll have $12,000 to $14,000 to spend on a car just three years from today.
- If you wash-rinse-repeat, in another three years, you’ll have another $10,800 saved. If you are married, you can take this opportunity to replace his/her car for $12,000 to $14,000.
- If you are single, then the car you bought in Step 3 should now be worth around $7,000 to $8,000 so you can take your $10,800 in cash, sell your current car, and buy a different car for around $18,000 to $20,000!
- If you are happy with your car at this point in the plan, you can decide to wait until you really need to replace your car, but basic math will show that if you (A) Take care of your vehicles and (B) Can be patient for the first few years, you will have increasingly better vehicle options as time continues, not to mention the best part: you get to say goodbye to car loans for good.
For those who have lived with car payments for a long time, did you know that the average car payment is between $400 and $500 per month? The average length for car loans is over five years.
Here’s the bottom line: If you pay YOURSELF between $200-$400 per month to your car savings account (instead of borrowing a car and paying A LENDOR $200-$400 per month) for the rest of your driving career, you will never need to take a car loan again.