How To Never Have Another Car Payment

by Edson Senna
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Don’t give in to the idea that a car payment is just a part of life. Take these steps and you can get to a point where you never have to have a car payment again.

A car payment is something that many Americans have come to accept as part of life and part of their monthly budget. Because of this, many car buyers justify buying new or even luxury cars and shelling out hundreds a month.

The funny thing is that the primary buyers of these fancy, new-leather-smelling cars are not the rich; they are just average, American-middle-class Joes.

For the most part, the rich don’t buy new cars; the rich are rich because they save their money, not because they spend it all. Instead of getting into debt, most wealthy car owners find an affordable car and buy it with cash. You can too if you’re careful and clever. Here’s how to start:

1. Save up $3,500 for a used car.

I know that you’re thinking, “Are you kidding me? A car that cheap won’t even run!” You’ll be surprised at how many reliable cars you can find for this price.

Many people are worried about driving a car that has 100,000 miles or more, but most cars are actually pretty reliable for at least another 60,000-100,000 miles. My family has a beat up blue van with 200,000 miles on it and it still runs like a dream. Most concerns about car mileage are handed down from the older generations who were buying cars when they were less reliable.

So get $3,500-$4,000 together. (If you can’t come up with this kind of money, that’s further evidence that you shouldn’t be getting into debt for a car). The car will probably need some minor repairs, so factor this in when you’re buying and look for something closer to $3,000 if possible.

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2. Talk to family and friends.

Many people have an old car they want to get rid of. Ask you friends, your parents, and your grandparents. If you are a young driver, a good source is your mom’s friends; many of them will want to upgrade from the van they drove when their kids were young. (Being stuck with a van isn’t the worst thing in the world. At least you’ll be the life of the carpool party.)

You’re less likely to get swindled when buying from people you know. You’ll probably get a better deal. You’ll have some idea of the history of the car. And, hey, if it is a lemon, you know where they live.

3. Have a mechanic look at the car and get a vehicle history report.

A once-over from a mechanic will cost less than $100 and you’ll know if there are any major problems with the car. The vehicle history report will show any accidents that the car has been in.

Any good dealership should have the report on file. If you buy from a private seller, you can look at the report on many free websites or sign up for

4. Go for a common car.

When your car does need a repair (because any car will at some point), you don’t want to be shelling out thousands of dollars for expensive, hard-to-get parts.

As a rule, small cars tend to be the most reliable; SUVs can be more troublesome. So buy something average while you save up for something nicer.

5. Take the car payment on the car you would like to buy, and save it in your “Someday I Will Have a Nice Car” fund.

If your dream car is a 2021 Ford Mustang, for a five-year loan at 3% interest, your monthly payment would be $488.

Instead of buying the Mustang right now and having the stress of a car payment (even if you have a financial crisis), pay that $488 to yourself each month instead. In five years, you’ll have $29,280 (not including the interest your little bundle of cash will acquire) and you can pay cash for a car and drive it off the lot stress free. (Or you could buy another used car and put that money towards a house, which would give you a much better return in the long run.)

A surprisingly low number of Americans actually believe in paying cash for cars, and most of them are wealthy. Don’t give in to the idea that a car payment is just a part of life that you can’t avoid. A little planning and sacrifice can leave you car-payment-free for life.

Reviewed January 2023

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