It’s always a good idea to buy a car without a loan if you hate payments and can afford it. It will definitely save you some money and reduce the stress level in your life. The only way you will be able to buy a car without having to pay interest rate is by saving money years before you will need a new car.
It has been estimated by Consumer Reports that a car which has been well maintained while being used can be driven as much as 200,000 miles. So, let’s now do a little math. If you usually drive between 12,000 and 15,000 each year, you will be able to use the car you own for 13 to 16 years if no out of the ordinary event occurs. Let’s just hope no unfortunate accident will get your car totaled. But considering that this is the ideal situation and most of us hate being stuck with driving the same old car for years in a row, let’s just think about the more realistic numbers. For example, if you want to buy a car without a loan, if your car is 1 to 3 years old, you should wait another 5 to 6 years before buying a new one and save some money in the meantime. If you own a 4 to 6 years old car in 3 to 5 years you will need a new one while if the car is about 7 or 9 years old you should think about a new purchase in about 2 years.
So, now that we’ve taken care about the time frame, we should think about a saving plan. Let’s just say that it might be wise to make your car payments in advance. You should just find out what’s the monthly payment for a car that you would like to buy right now and deposit each month half of that amount in a separate bank account. The pressure on your family’s budget will be less and you will be prepared when it’s time for a new car. If you are the kind of person that easily forgets or gets easily distracted you should think about automating you car payments. You can have the monthly saving extracted from your monthly income and placed in that separate bank account. Any financial institution will be happy to help you with that.
Now let’s talk about that account. You should find a type of account that provides a high interest rate for savings. You are not going to pay interest, but benefit from it, so it should be as high as possible. Once you’ve done working on the budget it’s never early to start looking for a great deal. You should definitely do that with 9 or 12 months in advance if you aren’t the type of person that watches the market constantly. Ask yourself what type of car you want, think about the transmission you would be interested in, the optional packages you find necessary and then estimate the total cost that will be involved. Also find out the gas mileage of the car you want to buy without a loan because that number will affect your family’s budget on long term.
So, the key to buying a car without a loan is to be prepared, always think in advance and have wishes that are friendly to your budget. In the end, you just need to realistically save money in advance and once you make up your mind follow through. Don’t let the dealer change your mind! Stick with the budget car you chose!