How to Avoid Car Loans

Many people consider car loans a necessary part of life, but a car loan is not a necessity. If you have struggled with high car payments or you want to begin saving more money for retirement, you can find that money by avoiding car loans. With careful planning and execution you can break the car loan cycle and never have to borrow to pay for a car loan again. The money you will save on interest is worth it, but it also frees up extra money in your budget to do other things you want to do.

Instructions

1

Set aside money each month to pay for a new car. While you are paying off your current car loan set aside an amount close to it to pay for a new car when it is time to buy one. The amount can be reduced if you plan to own your current car longer than the length of the loan.

2

Purchase used cars instead of new cars. Cars take a big depreciation in value over the first three years. A three-year-old car is still reliable and may come with a warranty, and it's considerably less money than a new car. It also makes it easier to save up enough to pay for the car in cash.

3

Pay for car repairs until you have enough saved up for a new car. Although it may seem silly to keep paying for repairs on a car, you can save money on interest by repairing your car and paying cash for a new car.

4

Keep your cars longer than you had previously. Many people will drive cars for up to 10 years with no major problems. Keeping your car longer allows you more time to save for a new car, while still providing reliable transportation. Do not be as concerned about style and brand, but more about reliability and safety of your car.

5

Maintain your current car so it will last longer. Regular maintenance and tune-ups will help your current car last longer, giving you more time to save up money for a new car. Records of tire rotations, oil changes and other standard maintenance allows you to ask more for your car when it is time to sell it.