A Life Without Debt: The Debt Free Car

One of the items that people most frequently go into debt to purchase is a car. That’s not surprising given that even the most basic brand new car begins around $12,000. And that’s for four wheels and a seat; no extras or room for many passengers. Most people don’t have that kind of money lying around unless they’ve made a concerted effort to save for the day they need a new car. Most people just assume that a car payment is one of those things in life that they’ll never escape, like death and taxes.

But it doesn’t have to be that way. We’ve always managed to have two cars with no debt. What is required is a change in expectations. I know I’ll

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9 Responses to A Life Without Debt: The Debt Free Car

  1. John says:

    Great blog. Over here in the UK only the rich (or stupid) buy a brand new car! Go to a dealer and get a secondhand car with 1 year guarantee.

  2. lizajane says:

    I love my auction-purchased Crown Vic! Can’t beat the police special heavy-duty frame, transmission and all the other extras. I’m sure it doesn’t impress others one bit, but it sure is a nice smooth ride, and it’s a nice-looking car to boot.

  3. I completely agree with you . One need not buy new car when we can get excellent used cars at a much better value . They offer superior value for money and are light on our finance s as well. Then start the new car fund and then see if you can afford it..

  4. Monkey Mama says:

    I guess the nice thing is that where I live there are a lot of Grandmas driving sporty cars. Seriously!

    In our teens we bought OLD cars (that ran well. My first car lasted 7 years). In our 20s we bought “grandma cars.” in the $5k range for cars practically new. I had only bought private party (wonderful experiences) but my dh would only buy from a dealer for whatever reason. I agreed as our expectations rose, because I felt less comfortable exchanging $10k+ with complete strangers. We have come to love the “1 at this price” deals at the dealerships. Dh’s car was very inexpensive but has been a dream. (less than $8k, practically new). I tried the method for my last car and also got a great deal. My DH wants to buy a new hybrid next (& drive it into retirement. The one new car my family did own lasted 20 years so we are not opposed to new).

    That being said, we only buy what we can afford to pay cash for. It is a very different way of thinking than the norm. We settle on the colors and features available. Obviously it is worth the money saved. We’ve never had a car payment, but as our income and savings grow we have been able to buy up each round. That being said, but for dh’s hybrid dream, I think we’d be content to drive Granny cars forever.

    WE aren’t handy but we don’t spend a lot of money on car repairs. Replacing car parts with age is inexpensive. I’ve driven cars as old as 20 years and never had more than a few hundred dollar repair bill. Maintenance is key (simply regular oil changes, checking fluids, taking car in for any signs of problem, that’s all there is to it). The cost of maintaining an older car should be pennies compared to buying a replacement.

  5. EEinNJ says:

    I’ve followed a similar strategy and haven’t had a car payment in 12 years. I learned my lesson on a 400/month lease, which was a steep payment in 1995. Ever since I’ve saved $400 a month towards my next car. I started with Saab 900 Turbo, then a Subaru, another Saab, now a new Miata.

    A used car is not much cheaper, though, when you factor in repairs as they get older. If you get a real dog, as I did with a GM Saab, the cost advantage disappears.

    Still, if you plan ahead and save your money, eventually you can buy a nice car, new or used, and stay debt free.

  6. Marie says:

    We own both our cars outright. We were a one car family with two kids for 7 years. Right before we had kid #3 someone was unloading a minivan (a retiree drove it) for a song. In this state you also do not pay sales tax on vehicles purchased from a private seller. Automatic 8.1% return on the investment :).

    Most people here are excited to get rid of their car payments, it means they can go get another new car with its own payment. I don’t get it.

  7. Jackie says:

    I’m excited, I’m very close to paying off my car about 2-3 years early. I would like to put the $$ towards saving for my next car, but my next big goal is a down payment for a house so it might go there instead. My parents always paid off their cars early then continued to make that payment into a savings account for the next car, until they got ahead enough that they always pay cash now whether they buy new or used. :) Great, real life examples that it can be done.

  8. Paula says:

    Great post! DH and I have always owned cars that we paid cash for, whether they were “beaters” or not. Growing up, my parents never had money, and so always had old cars that my dad fixed up and ran till they died. Recently, my father finally bought himself a new truck that he paid for in cash after he negotiated a nice deal.

    Having said the above, I also can understand people buying nearly new vehicles that they make payments for and drive for years. Just this past month, DH and I decided to upgrade to a “newer” vehicle as both of ours were sixteen years old and we have a son with special needs and live in the country. So, we made the decision to buy a two year old economy car for my husband to commute with (making low monthly payments) and for me to keep my 93 wagon for a little while longer, saving for a replacement for that when the time comes. (While I would love to own just one vehicle, both DH and I work full time in a rural area and have different hours, with our son being in school part time and daycare the rest.)

  9. We own both our vehicles outright. Paid cash, bought them both the same day. We now have CDs put back to replace these two, and another CD for the next car after those two. We’re saving up for the next CD to make it a matched set! :D

    We’ll sell our cars outright and then look for used again.

    Living below your means? A good thing!

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