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  • Writer's pictureBrad Wooten

How to pay CASH for your cars

Updated: Dec 29, 2020

(Don’t want to read? Check out the video here)

Don’t believe the lies. This IS possible. You do not have to take out a loan to buy a vehicle. Similar to many, many things I share on personal budgeting, this has very little to do with knowledge and everything to do with discipline and contentment.

If you need that brand new F-150, I have nothing for you. There’s no secret to writing a check and paying cash for it other than a very high paying job or very disciplined savings over time. The average car payment today (according to google) is $381 – $530 a month. For a mere $250 a month, I can show you how to pay CASH for a $20,000 vehicle every four years. 

First off, let's assume you start off with a used car in the $4,000 range. Start saving $250 / month for your next car and here’s how the next 8 years could play out:

$250 x 24 months = $6,000 saved + $2,000 (sell your car) = $8,000.

$250 x 24 months = $6,000 saved + $5,500 (sell your car) = $11,500.

$250 x 48 months = $12,000 saved + $8,500 (sell your car) = $20,500.

*assumed roughly 15% depreciation each year on the value of the cars

You’re 8 years down the road and writing a $20,500 check to pay cash for your vehicle. It sure beats having to shell out $381 – $530 per month for a car the bank owns that is losing value every single day.

And you can repeat this every 4 years if you want.

$250 x 48 months = $12,000 saved + $8,500 (selling your used car) = $20,500 every 4 years.

“But I’ll pay more for repairs!” I don't believe this happens the majority of the time. Repairs, when necessary, are a lot cheaper than paying an extra $15,000 NOW for a new (or newer) car plus interest on a loan. You think you’ll spend that much in repairs? I think it's a lie we tell ourselves because we want that nicer car and we need a way to justify it.

Track record: Here are the used cars I have purchased.

in 2007, bought $3,600 1995 Grand Cherokee. Sold in 2014 for $2,000. in 2008, bought $12,500 2004 Jeep Liberty. Sold in 2012 for $9,500. in 2012, bought $21,500 2009 Chevy Traverse. Still driving in 2018 (update: this one did die in late 2019). in 2016, bought $3,200 2001 Chevy Suburban. Sold in 2017 for $2,000. in 2017, bought $4,000 2004 Chevy Tahoe. Sold in 2018 for $4,000. in 2018, bought $10,000 2011 Hyundai Santa Fe. Still driving in 2020.

Observations: 1) The cheaper the car is to begin with, the less it typically drops in value. That Jeep Liberty only lost $750 per year in value. My 1995 Grand Cherokee over 7 years… only $228 decrease in value each year I drove it. However, the Traverse, the most expensive car I've purchased, really took a hit each year and is only worth about $8,000 right now (2018)… which is a staggering $1,900 per year in decreased value. 2020 Update: Traverse died in late 2019. I got $600 for it, so it cost me $2,867 per year... ouch... still cheaper than most new car payments though.

2) Discontentment will cost you. While we were in California I sold the 2005 Grand Cherokee in order to purchase a motorcycle (and a really cheap Suburban). I saved some money in insurance by purchasing cheaper vehicles and in gas by driving the motorcycle everyday. However, the drop in value of the Grand Cherokee in 1 year really cost me. Hanging onto it longer would’ve helped.

3) It's no guarantee, but I have not had to shell out tons of money in major car repairs. I drove the Traverse across the country twice plus other long road trips. I had an issue with the water pump in Denver in 2014… but there’s no guarantee that wouldn’t have happened to a new vehicle also. Even if there are repairs, it'll take a while for them to add up to anything near what you’ll pay for a new car.

If you’re nervous about buying used… here are my 6 tips for buying a used car.

Bottom line… contentment and living within your means will bring tremendous peace and freedom. If you pay cash, there’s no risk of missing a payment and losing your car. Don’t spend money you don’t have just because you want a ‘nicer’ car. They drop in value every single day you own them; they’re a horrible investment. Let someone else take the "new car depreciation hit", buy used, hang on to it for a while, make necessary repairs, save for your next vehicle.


Read more about me. I enjoy helping individuals with their taxes, businesses (including nonprofits and churches) with tax or accounting and other finance related questions, and I also enjoy helping people resolve tax debt, liens, levies, or other tax help you may need. I live in Lake Nona in Orlando, Florida, but I serve clients all across the country. Schedule an appointment if you need assistance and take a look at the resource page.

*The blog posts (as well as the YouTube channel) are my personal opinions and thoughts about a wide range of topics. They are not meant to apply to individuals specifically and should never be relied on as tax or investment advice. You should contact a professional for specific advice before taking action.

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