How to Never Make Another Car Payment Again

Car Payment 101: Never Need an Auto Loan Again!

•  4 minute read

Keep your car longer and save the money you'd otherwise spend on payments so that you'll never have to make another car payment again.

Cars are a huge part of American culture. People see their cars as a way to express themselves. Unfortunately, expressing yourself through a car could cost you a pretty penny, leaving you with a pretty scary car payment.

It seems that Americans accept car loans as a simple fact of life. I’ve noticed that people generally trade in their current car for a sparkling new one as soon as they pay off the loan. Sadly, that new car almost always comes with a new auto loan. And yet, with a little bit of planning and self-control, you don’t have to take out another car loan for the rest of your life. Here’s how to break free of the cycle and never make another car payment again:

  • Keep your car as long as possible
  • Pay off the loan, but keep saving your would-be car payment
  • Make repairs instead of buying a replacement

 

Keep Your Current Car

The first step toward escaping car loans for the rest of your life is to keep your current car as long as possible. Personally, my car is six years old — and my wife’s is nine. Both have under 100,000 miles on them, and we plan to keep them for a while longer. Keeping your current car may be a challenge for some, but it’s well worth it. Yes, your car is now older. It doesn’t have all of the fanciest features. But that’s okay.

Some people purposefully buy 5-year-old cars to save money, and those people turn out just fine. You will, too.

Of course, you should never keep driving a dangerous car, but for many people, the objection is driving something that they’re tired of, not something that isn’t safe.

If you’re desiring a change, one inexpensive alternative to a new car is to update your car’s look. You can do so with seat covers, body kits, and more. AutoAnything offers interior and exterior items to help spruce up your existing ride, and is far cheaper than financing a new car!

 

Save Your Old Car Payment

Once the car loan is paid off, avoid the temptation to trade in your car for a newer version. Instead, take the money you used to devote to your car payments and stash that cash in a separate bank or investment account that is difficult to access. Each month, send another “car payment” to that bank account and watch the balance grow.

If you’re lucky enough to keep your car for twice as long as your original loan, you’ll save enough money to buy a brand-new car without taking out another one. That doesn’t account for inflation, of course. But while you may need to save for a couple of extra months due to inflation, you’ll still be able to buy another new car if you want.

By doing this, you’ll save a significant amount of money. For instance, if you took out a six-year, $20,000 car loan at 5.9 percent interest, you’d pay $3,797 in interest over the life of the loan. You could invest that $3,797 instead, with a company like Stash Invest, and earn interest instead of paying it!

 

Don’t Replace — Repair!

But what if my car breaks down or I get in an accident? You’re actually in a pretty good position if that happens. You’ll have money in savings that can pay for the repairs — and even pay for a rental car or ride-hailing service, if you need one.

You might be tempted to go buy a new car to avoid the headache of repairs, but in most cases, the repairs will cost you just a fraction of the money you’ve saved — and it won’t come anywhere near the cost of a car payment or two. My wife’s nine-year-old car has had only one “major” car repair, which occurred when the muffler weld broke. The total cost was $62 to fix the muffler, which is much less than the three to five years of car payments that would come with a new car.

But what if someone makes fun of my old car? Shake it off. We’ve never had anyone make fun of our cars, even though they’re both older now. Yes, they have some dents and scratches, but a little bit of maintenance can keep your car looking great. In fact, you could pay someone to detail your car for cheap compared to the cost of a new car. My wife recently had her car detailed, which cost us $150, and her car almost looked like new afterward. That $150 was well worth it if it means avoiding purchasing a new car.

 

If You Have to Buy…

If, after all is said and done, you need to buy a car, be sure you comparison shop to find the best option for you. Make sure you find a complete inventory between several dealers with a company like Edmunds.com; they offer a wide range of car variety to suit your budget and tastes. They also connect you with local dealers and offer upfront pricing.

One hidden gem option is with Sam’s Club Auto Buying program. Most people think of Sam’s Club for groceries or bulk goods, but their auto buying program can help you save thousands of dollars on a car, and offers you another outlet of options to choose from.

 

A Final Thought

Car payments are for suckers. Don’t fall into the trap of buying a new car every three to five years. Keep your vehicle longer, save the difference, and buy your next ride in cash. If you continue to keep your cars for longer, you’ll even be able to build up some savings for other goals, like retirement or a fantastic vacation.