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You have to get a loan to buy a car…

Simply put, this is complete nonsense. You do not have to have a loan to buy a car. You simply need to be disciplined and save the money first. Even if decided to buy the kind of car. You need to control your impulsiveness and keep the long term goal in mind. Most people convince themselves that they must have a new car for all sorts of “convenience and lifestyle reasons.” Since the auto industry makes it so easy and attractive to get credit, it is extremely tempting to go into debt to get a car you cannot afford. The simple fact is, if you must take out a loan to get a car, you are buying a car your income cannot afford.

The truth is, you can get a lot more car for your dollar if you save up the money first, look for a very well maintained two or three year old used vehicle, and start waving cash around in front of a motivated seller.


Do my comments about car loans sound familiar to you? When I was a teenager, I got my first job. I immediately determined HOW MUCH CAR PAYMENT I could afford. Of course, I had no problem finding a car dealer who agreed with my assessment that I could afford $225.00/month in car payment… after all, I made over $500 in monthly pay! (If that percentage of income for an auto doesn’t scare you, it should!) Of course, I discovered quickly that there is more to owning a car than the minimum car loan payment.

As my income rose, about every year or so I got new car fever and carefully calculated that $50 more a month, or $80 more a month was something I could “easily” afford, especially when I got “no payments until March” and no down payments.

As you can imagine, I ended up about 10 years later with a $600+/month car payment on a vehicle that I was MANY thousands of dollars upside down on, aided, of course, by each car dealer who was more than willing to rollover my deficit into a new loan.[TIPJAR]

Once I got smart, I paid off the deficit on the vehicle, then sold it for book value to get out from under WAY MORE car than my income could support stress free. I’ve never bought a new car since. I’ve purchased, WITH CASH, reliable used cars. Currently, we drive a very decent 4 year old Honda minivan and a 3 year old Toyota. We don’t owe a dime for cars and could sell both of them for a profit at any time if we chose to.

This is a story I have told my kids over and over. You should warn your kids about the dangers of “new car fever.” If you are in the same situation I was in, don’t worry, you can get out of it too. Pay off the deficit if you are upside down, then sell the car. Save your money to buy a used car WITH CASH, even if you have to drive a junker for a while. The stress is not worth the lifestyle of debt.

You do not have to have a loan to buy a car! Quit letting commercials convince you that you do!