Save Money By Keeping Your Car Longer

We have two cars.  One is almost six years old and the other will be five years old sometime this year.  These are among the longest length of time that I’ve kept a car.

Turns out, we’re still a few years away from hitting the ‘average’ as it was recently found that the average age of a car in America is 10.8 years old.

So we’ve still got a few years to go!

It really does save money.

If you figure the average car payment is $300 per month and the average loan length is four years, that’s over six and a half years of not making payments that you would see if you kept the car that long.  That adds up to a whopping $23,400 in payments you aren’t making.

Granted, you will have maintenance costs associated that will increase as the car gets older.  Say you have to put an extra $5,000 into a car over that time.  You’re still on top over $18,000.

The smart thing to do is to make the car payment anyways.  Now, don’t send it in to the loan company, because that wouldn’t be smart at all.  Instead, make the payment to yourself.  The first month without a payment, send that $300 into a savings account on the same day of the month you would have made the payment.  Keep doing so.

When you need to pay for repairs, you will have money available.  And when you hit the time when you need a new car, guess what?

You’ll probably have enough money to pay for virtually the entire thing.  In other words, no car payment.

Many people go through life assuming that a car payment is a fact of life.  The true fact is, it doesn’t have to be.

By following the two simple steps:

  1. Keep your car longer
  2. Bank the non-car payment

You can enjoy the rest of your life with no car payments.

 

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6 thoughts on “Save Money By Keeping Your Car Longer”

    1. It’s really a matter of personal preference. Mostly, we buy luxuries. We buy convenience. We buy ease. We buy style. We buy reliability. All of these things we buy are descriptive of a new car (in most cases). People who buy new cars (like me) are no different than anyone else spending money on the things they care about…

  1. I’m not a finance blogger (nor do I play one on TV), but I must admit that after being on Yakezie and interacting with many finance bloggers, I must say that my interest in financial stuff has been picqued. Who knows? Finance blogging may be my next “adventure”.

    I digress…

    I can agree with the bit on keeping your car longer – even though the hubby and I both love cars (we’re going to the STL car show this weekend) and have bought over 10 cars in our 7 years of adulthood (not smart decisions, I know). I will probably not keep my current car much longer. Even though it is a 2012, it’s a Honda Civic and my driving preference is an SUV. I have my eye on a few that I like, but here I go off topic again.

    My biggest question is – why tie up your liquid capital in a depreciating asset (pay cash for a car – used or new)? I don’t have much cash, but I will say that I’m not sure that I would pay cash for a car ever – especially if I can score a 0% interest deal. What is your reasoning for wanting to pay cash for a car? Does the feeling of not having a check to write each month give you a greater sense of security than knowing you have a chunk of cash sitting in the bank?
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  2. This is a very tough decision to make I believe that keeping a car that has relatively few problems is always a wise idea. The issue with buying a used car is their is is no warranty on anything that is defective. Unlike a new car This is a close call I would say its a draw as far as saving money goes that is I do not think owning a used car is at a advantage over buying a new car and keeping it for 10 12 or 15 years. If you take good care of a car from the time you buy it brand new it could last 15 years so the price of buying it brand new would only be a small part of your total cost over time. One fifthteeth of say fifthteen thousand is only seven hundred fifty dollars a year really not all that much money. If you go though two or even three used cars over a fifteen year period how much is that going to cost you.

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