Why I'm Paying Cash For my New Car!

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Why I'm Paying Cash For my New Car!

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Remember when my van hit 100K miles and I was wondering how long it would last?  It now has 115,000 miles on it, and although we just had to put in new front brakes, all signs point to our van making it at least until we finish our debt management plan in eight months.

But the time to save for our van's replacement is NOW.

You may ask why saving now is necessary.  When we complete our debt consolidation plan we'll have a significant increase in money available each month ($2489 extra to be exact).  Surely we'd be able to afford a car payment, right?  That may be true, but one of the things I've learned while traveling the debt management program highway is to value every dollar, and financing a vehicle is just throwing money away.

Imagine walking around a car lot, when suddenly a gently used car catches your eye, sparkling in the sunlight (because buying a brand new car is also a waste of your money, but that's a different subject for a different time).   You fall head over heals for the car during the test drive, and as you pull back into the dealership's lot you've already made up your mind that this is "the one."

Sitting across the desk from your salesperson you begin the age old dance of negotiation.  He or she tells you how much they'll give you for your trade in, lists the incentives and promotions that are currently going, and circles a number at the bottom of the page that is how much they want you to pay for your new golden chariot.  Now it's your turn to counter offer.  You think about it carefully, running numbers in your head.  You narrow your eyes and in a very stern voice offer the salesperson a few thousand MORE than what they are asking for the car.

Wait, what?

Sounds crazy but that's exactly what you're doing when you agree to finance a vehicle.  Haven't we all listened to people brag about how much they were able to negotiate a salesperson down on the price of a vehicle?  Next time ask them how much the total cost of the vehicle will be when they add in their finance costs through the life of their loan.

Warning:  They may cease smiling and be a little unhappy with you.

There are certainly circumstances where a vehicle loan may be needed.  After all, transportation is generally a necessity of life.  But our van is running fine, and as long as it is still taking us where we need to go, we're going to keep stashing away money for it's replacement.  I'm not a world class negotiator, but I know that paying interest on a vehicle loan is just a way to get immediate satisfaction at the cost of long term overpayment 

No Thanks, that's exactly how I got into debt in the first place.

Related Links:

How Much Longer Will my Mini-Van Last?

Do we Really Need a Second Car?

Comparison shopping for car repairs pays off

 

Travis Pizel, debt management plan customer with leading provider of debt relief, CareOne Services, Inc. Travis Pizel

Travis is a contributing writer for the A Straight Talk on Debt blog. He is also a very active member of the CareOne community forums. Travis is currently enrolled in a CareOne Debt Management Plan (DMP). Travis candidly shares his personal journey to pay off his debt and the tips he's learned along the way. As a father and husband he provides a unique perspective on balancing debt, finances, and family in Minnesota. You can also read more from Travis on the Enemy of Debt blog, where he is a featured blogger. Compensated Blogger for CareOne Debt Relief Services.

To connect with Travis on Google+ click

You can follow Travis on Twitter @DebtChronicles

 

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  • awesome thoughts; thanks for sharing.  I'm driving a 2004 vehicle, a Katrina flood car purchased in 2005, which came off an auction.  Of course that also means I had to pay cash because you cannot finance a flood car, plus I had to pay cash for a few repairs and updates (tail lights were busted, it needed a new paint job and new tires, but nothing major).  Now I can honestly say that as a general rule I would not buy a car off an auction, but since I knew someone in the business who had a list of my "shopping preferences" for cars, I took a chance.  When he called with a 2004 Lexus that, for whatever the reason, was at the end of the auction when most dealers and folks were long gone, I got the deal of a lilfetime!  Because Lexus and Toyota are great cars that you can count on for lots of mileage, I've now been driving the same car for 8 years with absolutely no problems whatsoever and I'm planning to continue driving it until there's no life left in the car -- long enough for me to be debt free for my upcoming retirement.  Who knows, perhaps by the time I close in on retirement, I  (or my trusty son in law) can find yet another deal of a lifetime; however, even if I can't find a deal as great as this one, I'll be paying cash for whatever I purchase.  I am not remotely tempted with new cars on lots ... (1) I don't want to haggle with a salesperson to make any purchase, (2) I don't want to spend the money they are asking these days, and (3) I love the freedom of not making a car payment ... nothing better!

  • That is so, so, so true. Good luck with the plan. I can tell you see the end coming! Just keep on plugging along!

  • I would have been very wary about purchasing a flood vehicle, but it sounds like it worked out for you, SouthernLady7x7!  One thing we can definitely agree on is that not making a car payment ROCKS!  Thanks for sharing your experience!

  • Oh, Kimmer5000, I can more than see the end coming...I can FEEL and TASTE IT!  :)

  • Travis you could not be more correct. Car negotiations can be brutal... one thing that has always worked for my family is going in and telling the dealer that we look at price, not monthly payment. Telling them what monthly payment you can afford is the nail in the coffin as they have so many creative ways to finance down to that monthly payment.

    Very excited to hear that you only have 8 months left on your DMP! Way to go.

  • I've made that negotiating mistake before too, Jean.  One time they got us to the magical monthly payment by offering us a 72 month loan.  YUCK.  Never again!  Thanks for the encouragement, that finish line is getting closer and closer!

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