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 never have a new car. I don’t want to buy something that will drop 30% in value the second I drive it off the dealer’s lot. And I don’t want to spend that much of my savings just so I can say it was “new” at one time. It’s not worth it to me. I would much rather focus my buying efforts on finding a good quality used car that is selling for a fraction of its true worth. A car is not about image, to me. It’s about having paid for, reliable transportation. Period. The fastest way to incur debt on a car purchase is to get mixed up in the idea that your car somehow says something about you. Trust me, it doesn’t. All a car says is that you can get from place to place. I also never buy more than I need. Why have a big SUV for a small family? Why load on all the extras if you don’t need them? Don’t need it, not going to buy it. That simple philosophy has saved me thousands in car money over the years.
I call my ideal car a “Grandma car.” These are the cars that are being sold by the heirs of an estate just to get rid of them. The heirs don’t care about getting the true worth out of the car; they just want to get rid of it and eliminate one more responsibility. Maybe the elder has died, gone into a nursing facility or simply can’t drive any longer. Whatever the reason, the heirs don’t want to deal with the car, so they unload it cheap. Usually these cars have been well cared for and driven very little. They are the ideal cars. I’ve driven some pretty impressive land yachts this way, complete with every extra offered. I may look strange, being a relatively young woman behind the wheel of a massive Crown Victoria, but it’s paid for and I could care less what people think.
Failing a Grandma car, I look for other cars that are well maintained and, for whatever reason, going for a song. I once found one being sold by a “car guy” who maintained that car better than any professional mechanic. It was a beauty. And he was asking about $3,000 below Blue Book. I asked him why and he said it was because it had been his son’s car and the son had died of cancer. He only wanted to get it out of his sight and sell it to someone who would give it a good home. I bought it for $3,500 less than Blue Book because the car guy thought I was a nice, sympathetic person who would cherish that car. I did. Private sellers are the place to look for deals, not car dealers. Car dealers usually want too much profit from their used cars. You can do better by scouring the classifieds and looking for someone just looking to unload a car cheaply.
In the beginning when we had no money we weren’t as picky about our cars. We just bought the cheapest thing we could find that ran. In other words, a Beater. My first car was a cast off from the state’s vehicle fleet. That Chevrolet Citation was a piece of work. It was eight years old when I got it and had over 100,000 miles on it. The engine groaned when you put your foot on the gas and if you went over 55 MPH, it shuddered and rattled like it was going to come apart at the seams. It had no extras and AM radio only. It cost $1,500. But it ran and got me to and from work and school safely and reliably for four years before finally kicking the bucket. But after four years, I had saved enough to “trade up” to a used Ford Taurus. Compared to the Citation, I was living the high life. I’ve traded up a little every time I’ve bought a car and I no longer need to look for Beaters, but I still don’t spend any more than I have to to get a solid, reliable used car.
The trick to buying cars debt free is to always be saving for your next car. Buy something very cheap in the beginning and then start the car fund. You know you’re going to need one at some point, so start saving for it the minute you buy the current car. If you keep the current car until it dies by the side of the road, you’ll have many years to build up a replacement car fund. Save often and aggressively and you’ll probably be able to afford something a bit nicer each time you buy, especially when you add in the money you’ll get from selling your current car. If you search for a great deal, don’t buy more than you need, and haggle well, you’ll probably have a little of your savings left over as seed money for the next car.
Basic car maintenance skills can be helpful in keeping free of car debt. If you are buying older cars, there is a chance that some things might need replacing sooner rather than later, like brake pads, belts and hoses. If you can do those repairs yourself, you’ll not only save yourself a lot of money, but you’ll take some of the anxiety out of owning used cars.
A final note: Buying good used cars will save you in other areas, as well. Insurance rates are often much lower on used cars. And, since older cars aren’t as attractive to thieves, you’re less likely to have theft problems, as well. Owning a car outright is far preferable to making payments. If disaster strikes and you lose an income, a paid for car will still get you to work and interviews. It’s yours and they can’t take it away, even if it’s the ugliest thing out there. If you lose a financed car to the repo man, you’re hosed. Plus, with a paid for car, you can sell it if need be and pocket the funds.
It’s a myth that you have to go into debt to own a car. But you do have to learn to buy smart and to adjust your expectations. Cars are transportation, no more and no less. A Beater car will get you to the same places as a a shiny new car for a fraction of the cost. If people think you’re strange or the devalue you because of your car, you don’t need them. Just buy a car and leave the image and ego out of the equation. You’ll save a fortune and keep yourself out of debt.