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:
- Keep your car longer
- Bank the non-car payment
You can enjoy the rest of your life with no car payments.
Copyright 2013 Original content authorized only to appear on So You Think You Can Save. Please subscribe via RSS, follow me on Twitter, or receive e-mail updates. Thank you for reading.