Oct

Shop Smart Pay Cash For A Car

We have all done it, bought more car than we could really afford. For what ever reason we try to use in our mind to justify the purchase. I need a SUV to haul the kids around. My car was to small for the three car seats so I bought a new mini van. I just wanted a new car I was sick of the old one.

We get car fever and the dealers love it. Now I firmly believe you can get a great car with no car payments, you just have to be patient and look around a bit.

The average car payment in America today is $487 a month, think about it, that is $5,844 a year. For many people that would pay of a credit card or two. To make matters worse, most of those payments are financed out for 60 months, that is just for a $29,000 car. Once the car is paid for is usually only worth just shy of half that amount if you are lucky. As soon as you drive a new car off the lot, and I do mean the second you enter the road with your new car, it dropped in value by $2,500 or $3,000 and went from new to used all within a matter of minutes.

So what is a person to do. Well, first you have to look at a car for what it is, transportation, that is it. When you start looking at it as a “status symbol” or you go in for the “bling” factor you are going to get taken by some nice sweet talking sales person, you will throw money away instead of using that money to work for you. Take emotion out of the equation. Purchasing a vehicle is a business transaction. You need a ride to get you from point A to point B safely and successfully. And that can be done with a used vehicle, really it can, I do it everyday.

Oh I know what you are thinking, but I want it to be reliable and only new cars are reliable, they have a warranty if something goes wrong. If I buy a used car I will be fixing it all the time, throwing money into it to keep it going.

NOT!

Think about this, could you ever put $487 a month worth of repairs into a vehicle for 60 months? Of course not. Sure a three to five year old vehicle will have things go wrong, but repairs on a car you paid cash for will still be far less than a consent car payment for 60 months.

Now that you have the right mind set, focus on paying cash for the car. Do you know how many reliable cars there are that are $5000 to $7000, loads of them, they are all over the place, someone else has paid the depreciation, they are coming off of lease, they are really all over the place. And yes, they are reliable too.

Also, here is a little known trick, did you know when you walk into the dealer with cash in hand, you can get that $5000 to $7000 car for even less. These sales people work on commission, and when sales are down and they are looking at cash in hand they will make you a deal. Know your numbers as they relate to the car you are shopping for, look it up online at Kelly Blue book or NADA. When you shop with knowledge and cash, you shop with power.

Now that you bought your new “used” car, you do have to be smart and put some money away every month for general maintenance and the occasional repair. But you still don’t have to put aside $487 (although it would be nice if you did), you could budget say $250 each month to put in savings earmarked “car” and that can be used for your maintenance, repairs, and even for your new “used” car fund when you want to upgrade to a newer used car.

Again, and I can’t say this enough, it is all about planning and focusing on the big picture. A vehicle is just a hunk of metal to get you from one place to the other and a $7000 car can do that just as good as a $29,000 car.

Let me close with this thought, do you know the average millionaire, and by average I mean first generation, self made millionaire purchases a car that is two years old or older and pays cash for it. Now you know why they are millionaires, they know where to put their money, and spending it on a high priced car is not the place.