Paying Cash For Used Cars

Do you hate making car payments?

In 2009, I purchased a 2007 Toyota during the government’s “cash for clunkers” initiative. Dealers were incentivized to overvalue trade-ins in an effort to get older cars off the road and reduce air pollution. This drove the price of used cars down significantly. I was then able to buy a 4-Runner for under full retail value. Now I had been driving it for 15 years when COVID hit. That drove up the price of used cars. My 2007 Toyota was worth only $5,000 less than I had paid for it! I never paid interest on a loan or had any major repairs. My cost per mile driven over 15 years was very, very low. In fact, driving that car for 180 months at a cost of only $5,000 equaled $27 a month plus gas and maintenance. That’s the equivalent of financing one at zero percent interest for $69/month for 72 months. Isn’t that wild? That’s why I purchase dependable used vehicles that hold their value.

I finally replaced the 4-runner with a used Tacoma. We put as much of it as allowed on our credit card that we pay off monthly. Then, we wrote a check for the balance. Now I hope to drive it at least as long as the other one. Now as soon as you pay off your car loan, continue making those payments to your own bank account. Do this until you accumulate enough to buy a vehicle without borrowing. You’ll save money and create more financial margin in your budget.

And if car payments have created credit card debt, let Christian Credit Counselors help. They’ll create a debt management plan that works for you. For more information visit crown.org/ccc.