Need a new car but don’t want to go into debt over it? You have a lot to think about and potential compromises to make in order to stay debt free. Here’s how to buy a new car without going into debt and how to get out of it quickly if you do.
How to Buy a Car without Going into Debt
Compromise
The first thing you’ll want to do is to create a list of needs and wants in a car before you go shopping. This ensures you won’t forget things and you’ll be able to easily compromise if you split your list into needs and wants as well as in order of priority. If staying out of debt is your priority then you may need to compromise on a few things when buying your new car. Your biggest compromise may just be buying used if you had your heart set on a new vehicle.
Buy Used
The absolute best way to save a whole lot of money when buying a new car is to buy used instead of new. Used cars cost just a fraction of the cost of new cars. You also won’t have a heavily depreciated asset as soon as you drive out of the lot, being that new cars reduce in value by about 30% their first year. If you wanted new but also want to buy without going into debt then you might compromise by buying a newer used car with less miles. You’ll be able to find many newer used cars less than a year old online or at auction.
Save Up
Of course, the only way to stay out of debt is to save up for any purchase rather than getting a loan. Unfortunately, this isn’t always an option but if you’re able to continue to use your old car while you save to get you from point A to B, catch a tram or a bus for much cheaper than the cost of your daily petrol then you’ll be able to save up enough for a used car in no time without having to go into debt. Of course, this isn’t always feasible and in some instances, it may make more sense for you to get a small loan to purchase instead.
How to Get Out of Debt Quickly
Choose your Loan
If you have a ticking clock on your car purchase and don’t have time to save or you’re just not willing to compromise on buying a brand new car, then you’ll need to get a loan. In order to get out of debt quickly it’s important to choose the best possible loan with the lowest interest rate. It’s unlikely you’ll get a good deal at the dealership but it’s still important to shop around and evaluate all your options so that should be your first step. Next, you’ll want to look into car loans and personal loans. Often car loans have a lower interest rate, however they’re also less flexible and in many instances you won’t be able to get one to buy a used car. Personal loans are often much more flexible than car loans but you will likely have to pay a higher interest rate for it.
Pay it Off Quick
Of course, if you’re trying to stay out of debt but need a loan for your new car, then you’ll want to pay it off as quickly as possible. To do this, shop around and be smart about the car or personal loan you choose before you buy. Next, you’ll want to put a savings and payment plan together to pay it off as soon as you can. Don’t simply make the minimum repayments, instead put on as much as you can, as often as you can in order to pay the least amount of interest possible.