How to Buy Cars without Loans

For some it might seem unthinkable to buy a car without taking out a car loan. The price of a new, or even used car, can make that seem prohibitive. But it is possible to avoid car loans and pay cash for cars. The steps in this article will show you how.

Difficulty: Moderately Easy

Instructions

1. Begin by paying off early the car loan that you currently have. Throw every extra dollar available toward your car payment. If the loan is too large, and is making it impossible for you to make progress, consider selling your car and buying a much cheaper car for cash to start the process.

2. Continue to drive the paid off car, while saving the amount of your earlier car payment in a high interest savings account. This is the key to breaking the cycle of taking out car loans for new cars.

3. When you are ready to buy a new car (either because you have enough saved or because your car has become unreliable) use the savings account established in step two to pay cash for the car. Spend no more on a car than the amount of cash you have in hand. This may mean buying less car than you want but be firm with yourself.

4. Continue paying yourself the car payment as in step two. At all times you will have a replacement account going for your next car. The longer you can go without buying, the better.

Tips & Warnings

• You will probably find that buying with cash will motivate you to buy less expensive cars. This represents an additional savings for you.
• Buying used cars will make paying cash for cars more attainable.

Resources

• How to Refinance Auto Loans