How and Why to Buy a Used Car Cash: 3 Smart Money Bro Tips!
Who doesn't want to own a car cash outright? Everyone does, but few actually get to the point financially where they think they can actually purchase a vehicle for cash. It's as simple as saving your money for a car. I use the envelope method, which is incredibly basic and simple. It's discipline! Hear is a quick illustration of what you can do if you simply plan, save some cash, and execute. Here is a quick example explaining how you can do it!
In the next 12 months commit to save $4,000 cash, and purchase Car 1 at the end of 2018 when people are looking to sell cars to help pay for Christmas gifts. Take your $4,000 cash and use it + the sale of your current car for maybe $2,000. Now go out and buy a $6,000 used car cash. You can get a pretty decent car for that money. During the next 12 months, save $400 per month, so that you have $4,800 at the end of the 12 months. Sell your original $6,000 car for $5,000. Take that $5,000 + your $4,800 you saved, and go out and buy a $9,800 car for cash. Now you have a nice $9,800 car that you own cash.
At the end of 2019: You now have a $9,800 car you bought cash. During the next 12 months save another $400 per month, so that you have $4,800 at the end of the next 12 months. Sell your $9,800 car for 8,800. Take that $8,800 + $4,800 you saved, and go out and buy a $13,600 car cash.
At the end of 2020: You now have a very nice $13,600 car you bought cash. So 3 years from today you have a $13,600 car cash. You owe the bank nothing! Keep your car! Take good care of it for 5 years. During that time, pay yourself $400 per month, instead of paying a finance company for a car payment. At 10% interest in a good growth stock mutual fund, you'd have about $30,000 in that 5 years. No joke!
Please don't take out $30,000 to buy a brand new $30K car!!! Please don't do that. Sell your $13,600 car for maybe $2,000 (after all, it's been 5 years since you bought it), and take out about $12K from your $30K. Buy yourself another $14K car cash. Leave the other $18K in your mutual fund. That $18K, earning about 10% interest will then allow you to buy another $14K car cash every 5 to 6 years for the rest of your life, and you never have to add a dime more to it! You a
The example above it an example, but it's a plan showing you how you can buy cars cash for the rest of your life if you just commit to a plan, focus, strategize, and do it.
I want to back track and just point out here that most $10K cars usually work and run just as well as most $20K cars. This point needs to be made over and over again. People get car fever and when you get car fever, you don't think straight. To think that a $10K car is not good is simply wrong and not thinking straight. Will a $20K car look nicer, turn more heads, and bring more attention? Probably! But in terms of how a car runs, there isn't loads of differences between a $12K car a $25K car. If your purpose is to get from point A to point B, the differences mean little. If your purpose is to look good and floss, then there can be big differences, but why do you care? Answer that question, and then decide if the rest of this blog post is necessary for you to continue reading. If you want to save up and buy a $25K car cash, be my guest. However, it is more practical for most of us to buy a cheaper, but very good, used car that doesn't cost $25K.
Secondly, cars are the worst investment you can make. Let me say it this way: Cars go down in value continually. To invest large sums of cash, such as $20K and $30K, and up, in something that goes down in value from the moment you purchase it, is literally, one of the worse financial decisions you can make. Unless you are wealthy, or have a half of million dollars, then being less frugal in your car purchase is not wise nor practical. Making car payments is like getting a loan and financing the purchase of a brand new pair of super comfortable shoes for $1,000, and wearing them everyday through mud, dirt, rain, and snow. Instead of choosing to buy a similar used pair of shoes for $300, you choose the new ones for $1,000. You would NEVER do that, yet this is exactly what you do when you choose the $20K new car, over the 10K used car that will do the exact same thing for you at a fraction of the cost.
Here are 3 tips to buying a used car cash:
Tip 1: Take it to a mechanic while you are test driving it. Or simply meet the person selling the car, at a mechanic shop. Put it on a lift and you and the mechanic go over the underside of the car together. If you have to pay $50 to the mechanic, do it...Its worth it!!! If you buy the car, great. If you don't buy it because you discover something you don't like....that's great too and it only cost you $50, but it could save you thousands. This is money well spent. Trust me. The one thing you don't want to do is use your cash to buy a lemon, so you have to do your due diligence.
Tip 2: Always negotiate the price but never be afraid to walk away. Don't try to negotiate from a position of desperation. Desperation makes you a weak negotiator! Avoid being desperate, and be able to walk away if you don't feel comfortable buying the car. This is HUGE! This ability to be able to walk away will make you more patient, more careful, more picky, and ultimately more successful
Tip 3: You can often get a much better deal from an individual owner, than you can get at a dealership. When you buy a car cash at a dealer, you are paying a little extra overhead cost that is embedded in the cost. Don't assume that a dealership with a nice sign and a logo, is giving you the best deal, or offering you some security that an individual seller is not offering you. You pay for that feeling of security! I have had great luck driving back roads, farming communities, and rural areas. When you see that individual owner with that automobile perched in the corner of that 5 acre lot on a dirt road with a for sale sign in the yard, stop and check it out. Those are exactly the type of individual owners that sell good cars for fair prices, that are often times, in great shape.
I gave an example of a plan, but you can follow and develop your own plan if you like. The point is to commit to not having car payments and devise a strategy that works for you!
Happy purchasing your cars for cash!!