One of the biggest destructive financial myths out there today is the one that says you can’t pay for cars in cash and you will always have a car payment. As I always tell you, you can live without a car payment. It might not always be easy, but it is possible. My wife and I were able to prove that to be true a few weeks back when we purchased a new car for our family . . . with cash.
The reason for the purchase was that my wife and I had two older cars (both 2002 models) and my car was on its last legs. It had over 119,000 miles on it, the repairs were starting to add up, and the engine would start to make an annoying loud sound when you were driving. Because of that we didn’t feel comfortable driving a car like that on our 3,400 mile vacation last month.
Fortunately my parents had just gotten a new vehicle for themselves and had an extra car that they wanted to sell. After talking it over, my wife and I decided to purchase it. For most people a 2005 car with 65,000 miles on it might sound like a downgrade. But for us we were ecstatic because it was in good condition and we were able to cut a check for the purchase price. We took it on our vacation and had no problems with it whatsoever.
It felt great to have the money in our savings to pay for the car in full. If you have a car payment, it doesn’t mean you are a bad person or anything, it’s just that car payments rob you of choices. The thought of not having to deal with a new $200 car payment in our budget and instead getting to put it in our bank account is quite freeing. Could we have “afforded” a nicer car? Probably, but it’s not worth the debt we would have to go in to finance it. So if you are thinking of buying a car in the future with either credit or cash, take it from us, it’s worth it to pay in cash.
Have you ever paid for a car with cash? How did it feel?