Do you know that some people never get out of car debt? And it’s one of their biggest obstacles on their journey to true financial freedom. Fortunately, there’s a way to get out of car debt for good by following these three simple steps.
- Decide to keep your car at least three years longer than your car loan—and then pay off the loan.
- After your last payment, keep making the same payment, but pay it to yourself. Put it into an account that you will use to buy your next car.
- When you’re ready to replace your car, the cash you have saved plus your car’s trade-in value should be sufficient to buy a car without credit. It may not be a new car, but a low-mileage used car is often value anyway.
My wife, Bev, once drove the same car for 17 looooong years. She bought it second-hand and paid cash for it. This was one of the wisest financial decisions we ever made because the average monthly payment on a new car that’s financed is about $385. So, for 17 years she didn’t have a $385 auto payment which saved us $78,540! We were able to use this money to be more generous, get out of debt more quickly, and save invest more.