Avoid Car Payments and Vehicle Debt

Car Savings Accounts, Vehicle Maintenance and a Vehicle Budget

Mar 24, 2009 Barb Hacker

To save money, the experts recommend that you pay cash for vehicle purchases. Can the average family avoid debt by paying cash for a car?

A car or truck is a major purchase for most families. Because of the high cost, it is seemingly impossible to do without going into debt. But, it is possible to break the cycle and avoid debt and car payments for vehicle purchases.

To avoid monthly car payments and debt, it’s crucial to save money for future vehicle purchases. Maintain your current vehicle to make it last as long as possible. When you are ready to pay cash for a car, stick to your budget.

Car Savings Accounts

Open a savings account that you designate as a car fund. Deposit money regularly into this account to save for your next vehicle purchase. If you currently have a car payment, deposit as much as your budget allows each month. If you do not have vehicle debt, deposit the equivalent of a typical monthly car payment into the account.

Make this savings account off limits for anything that is not car related. If you have a large car repair bill and need to use the car fund money to avoid credit card debt, work twice as hard to replace the money each month. Increase your monthly contribution over the next several months until you have made up the difference.

Maintain Your Vehicle

Make your current vehicle last as long as possible. Keep on top of routine maintenance, like oil changes and transmission fluid changes. A few extra years out of your current car translates to a greater balance in your car fund and increases the likelihood of successfully avoiding financing a car purchase and debt.

Find a mechanic you trust to fix wear and tear problems as they arise. As soon as you discover a problem with your vehicle, take it in for maintenance. Small problems can turn into big problems if they are ignored.

Be realistic about maintenance expenses. It can be disconcerting to have a large repair bill, but a large bill once a year is still a better deal than vehicle debt. Debt means large payments every month, not just every once in a while.

Stick to a Vehicle Budget

When it’s time to buy a new vehicle, shop within your budget. For the greatest value, buy a used car in good condition. Before you buy, research cars by reading magazines like Consumer Reports and checking on-line reviews. This will help you find a reliable car that will have minimal problems. The longer the vehicle lasts, the longer you can avoid debt for a vehicle purchase.

Know what you want before you go to the dealer to avoid a high-pressure sale. Many dealerships have on-line ads so you can be prepared and look at specific vehicles when you arrive. If you shop wisely, you can pay cash and drive away with no vehicle debt.

It is possible for the average family to avoid vehicle debt. Open a savings account and begin saving for your next vehicle purchase. Maintain your current car and stick within your budget when it’s time to shop.

The copyright of the article Avoid Car Payments and Vehicle Debt in Family Finances is owned by Barb Hacker. Permission to republish Avoid Car Payments and Vehicle Debt in print or online must be granted by the author in writing.