How to Pay Cash for Your Next Car, Even When You Think It’s Impossible

Think you can't pay cash for a car? Think again! Here are four simple steps that will help you pay cash for your next car. Enjoy!

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Please enjoy this guest post from Dr. Jason Cabler at Celebrating Financial Freedom.

You can pay cash for your next car! Don’t believe me? Read on and I’ll give you the entire lowdown on how my wife Angie and I paid cash for our last three cars (and you can do it too!).

Cars are Crazy Expensive!

The average price of a new car is more than $33,000 and is financed for 6 ½ years with an average payment of almost $500/month. And since the average family has two cars, you can see that vehicles are a huge line item in the family budget.

Of course, this cost doesn’t include maintenance, insurance, gas, or other expenses. Let’s face it, the cost of owning cars is HUGE, especially if they are financed. You need to save money wherever you can!

In this article I’ll show you:

  • Why financing a car is costing you a ton of money.
  • The 2 things that need to change if you want to pay cash for your next car.
  • The simple 4-step process to pay cash for your next car (and every car after that!).

But first, let’s talk about financing and car payments.

Financing a Car is a Loser’s Game

I don’t know anyone who wouldn’t love to get rid of their car payment(s). It’s one of those “necessary” expenses that everybody loves to hate. But because cars are so expensive, most feel like they don’t have any choice but to finance.

When you finance a car, you’re paying extra money for the privilege of having monthly payments. So, using the numbers above, instead of paying $33,000 for a new car, you’re paying more like $36,490.

Therefore, because you couldn’t pay cash for the car, you paid an extra $3,490 for the privilege of breaking the cost into monthly payments.

Why would anyone want to pay all that extra money? It’s just not worth it!

You Have a Choice

Most people would rather not have to pay extra to finance their vehicle, but who can come up with thousands (or tens of thousands) of dollars when it’s time to buy a new vehicle?

You can.

You have a choice as to whether you have a car payment or not.

Yes, it’ll take some time and effort to turn things around.  But once you do, you will pay cash for every car you buy for the rest of your life!

But before you start the process, you’ll have to change a couple of limiting beliefs first.

2 Things to Change Before You Can Pay Cash for Your Cars

Of course, if you want to improve your finances and make the transition to paying cash, you can’t keep doing the same things you’ve been doing. You have to start thinking differently from most people to get the results you want.

Change Your Mindset About Car Payments

One of the most important things you must do is get rid of the mindset that says you have to have a car payment. Car payments are not a necessity, even if you don’t make a lot of money.

Anyone can pay cash for cars if they want, but most people just don’t believe they can do it. When you have the right strategy (below) and commit to the process, paying cash for a car is really not that hard.

Decide to Drive Used Cars Instead of New

Some people argue that they will only buy new cars because of safety, reliability, and any number of other excuses. Most of those excuses are BS.

Used cars don’t lose as much value as new ones and can be just as safe and reliable.

Don’t give into marketing and peer pressure that demand you have a new car. That’s what broke people do. You can get a solid, reliable, attractive vehicle at a good price without resorting to a junker.

I’m a perfect example. Even though I make a nice six-figure income, I drive a 2001 Lexus SUV. It’s an attractive car that runs perfectly. I trust it to get me through my 2-hour plus round-trip commute every single day!

And its best feature is that I paid cash for it!

The 4 Simple Steps to Paying Cash for Your Cars

Now that you have a different perspective about car payments and buying used vs. new, it’s time to get to the plan.

Don’t worry if you have a small income or no savings. This plan works no matter your income level.

Keep in mind this is not a quick process, but it sets you up for tremendous future success if you follow it through to the end!

Step 1 – Keep Doing What You’ve Been Doing

The first step is easy – just keep paying your car payment like you always have. Each payment gets you closer to paying it off completely. If you have extra money, add it to your car payment, or put it in the bank to save for your next vehicle.

Step 2 – Don’t Listen to the Little Voice in Your Head

Once you finally get your car paid off, it’s easy to start rationalizing. You know what I’m talking about. It’s that little voice in your head that starts prattling on when you get your car paid off.

That little voice tells you things like:

  • You finally got the car paid off – time to buy another vehicle!
  • This car is getting old, you deserve a new one!
  • You know, if you trade this one in you can get an even better car!

Don’t listen to the voices! They will keep you forever trapped in car payments if you let them!  Ignore the voices at all costs!

Step 3 – Drive it ‘till the Wheels Fall Off

Keep driving your paid-for car until the wheels fall off. Start putting your car payment in the bank, letting the total build over time.

DO NOT use this money for anything else! I don’t care how tempting it is, you will eventually need another car, and this money needs to be there when you do.

Be just as consistent at putting your car payment in your bank account as you were about sending it to someone else every month…no excuses!

Step 4 – Buy Your Next Car with Cash

Once your car dies, you should be able to pay cash for your next vehicle. Find a solid used car that you like, and don’t take out a loan for any reason.

Keep putting cash in the bank so when it’s time for the next car, the money will be there. Continue the process over and over until you die or your kids take away the keys.

You’ll never have to finance a car again!

Start Small if You Need to

It may be possible to only be able to save a little before you need your next car. If that’s the case, buy the cheapest car you can, drive it for 6 months or a year while you’re saving more money.

Then sell that car and use the proceeds along with your saved cash to upgrade to a better one. Do this two or three times in a row, then you’ll be driving in style in just a couple of years, without a car payment!

How to Accelerate the Process

A great way to get enough money to pay cash for your next car is to find a side hustle. Just a couple hundred dollars a month extra going into your car account will accelerate the process tremendously!

We Did it, and You Can Too!

Angie and I started using this process over a dozen years ago when we finally decided we were done with car payments. It took some time and patience to save up enough money, but we did it!

I put over 320,000 miles on my Jeep Grand Cherokee before it died, but it was totally worth it!  Then we paid cash for a sweet used Infiniti!

Since then we’ve paid cash for our last 3 cars. We will NEVER go back to having a car payment again!


Dr. Jason Cabler is the owner of Celebrating Financial Freedom, a top Christian personal finance blog teaching biblical and common sense ways to get out of debt, manage your money better, and build wealth like you never have before!Think you can't pay cash for a car? Think again! Here are four simple steps that will help you pay cash for your next car. Enjoy!

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  1. My wife and I are planning to buy our next car with cash, which will probably be in a year or two. We took loans on both of the cars we currently own but we paid each of them off in 1 year. After having no car payments for the past 7 years it would be really hard to going back to monthly car payments. Thanks for the article

  2. My wife and I buy our cars with cash. She usually buys new but keeps hers a long time. Her current car is a 2006 Nissan. I buy used, my current car being a 2008 Infiniti I bought a few months ago for $7,000. We are financially independent and slightly early retired and could be driving new Beamers but just don’t see the value in expensive cars.

  3. Cars have always been my weakness-horribly destructive to wealth.

    Sometimes, very, very occasionally, it’s better to get financing. I bought an Acura NSX at the beginning of 2017; we had the 40k to buy it outright, but decided to finance 30k or so of that from our credit union at about 2%. The market was up by about 20% for 2017, so we earned 18% on that 30k by financing…

    I don’t recommend this strategy for everybody!

    1. Sweet! You’re right though, not a recommended strategy. By the way, I’ve been wanting to get an Acura NSX for quite a while now. Once I get my kids out of college and get my daughter married off in the spring, I’ll be saving up! That’ll be my reward for finally getting the kids off the payroll!

  4. Great article! I’m trying to resist tempatation to buy a new car -because I don’ t have the cash. Needed to read this to keep me motivated.

  5. Drive it until the wheels fall off, totally agree with this! Cars ARE expensive, and as long as mine are safe and drivable, I’ll be doing the same thing. Our next car purchase is a bigger for us car (think Honda CRV). It will be paid for in cash and I love knowing that we won’t be paying back a ton of money in interest!

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