How to Significantly Save Money on Your Car Expenses

Car expenses can really eat up your budget. According to Lending Tree, the average car payment in the United States ranges anywhere from $563-$397 (depending on if new, used, or leased). Between car payments, car insurance, maintenance, and gas, it’s easy to see why this category demands so much from our budget and why so many of us want to save money in this area. Today, I’m going to discuss some tips for reducing your car expenses.

When to Sell Your Car and Buy a Less Expense One 

One of the quick ways to significantly reduce your spending is to sell your car. Depending on your circumstances, selling your car might be beneficial for you. Think about the following questions:

• What would it feel like to have no car payment?
• What would it feel like to have car payments that are $200 less than what you are paying now?
• Do you have a large car loan and are struggling with debt?
• Are you struggling with making ends meet?
• Do you want to be debt-free?

If you have a large car loan and are struggling with debt, having issues with making ends meet, or have decided to be debt-free, you may want to consider selling that car so that you can use the cash to buy a less expensive one, or get a smaller loan that is more affordable and that you can pay off sooner and with a lower monthly payment depending on your needs. This could significantly reduce your car expenses.

Buy Used Cars

When I was 25, I made the mistake of buying a brand new car. I am not against buying new cars, but at that time I wasn’t financially secure and financed almost the entire car. A few months after I bought it, I lost my job (which was the start of the housing crisis in 2007). I knew I made a mistake. Luckily I was able to quickly find another job and decided to keep my car and its $301 payment. But it took a while financially for me to get back on my feet. I then decided to pay off the car and accomplished that in late 2009. Let’s just say at that time I really wished that I did not have those high car expenses!

For 11 years, I owned that car and eventually sold it FSBO when I needed to buy a larger vehicle for my family of five. I sold it to a father who was buying it for his teenage son. The father knew how well maintained it was. The car was in great shape when I sold it. It had roughly 90,0000 miles on it. This is the type of car you want to buy when you are looking to get a decent car but don’t have a lot of money.

The last used car I bought was in 2013 and it was a 2007 Honda with 80k miles. I still have it 7+ years later. Like all cars, it requires minor maintenance but I have a good mechanic that works on it. I only take it into a shop for inspections and maintenance. It’s a Honda CRV and I think they are well made. I do not have intentions of selling it anytime soon. I think Honda’s and Toyota’s that are 5-6 years old are a good price point and what I would consider newer. If you find one that is well-maintained it will last. There is a big difference between buying a junker versus a good used car.

The goal is to buy the best quality car within your current financial means. Kelly Blue Book is a great tool. Also, being patient is key! I searched for my Honda for months and finally found the deal about 2.5 hours from me. During that time we only had one car since our other Honda sold pretty quickly (also FSBO). We like to sell our own cars to get extra cash for that new one!

Buy Cars with Cash

Lastly, make sure you are paying cash when buying cars. My CRV was the first time I bought a car with cash with zero financing. It was the best feeling in the world, and I firmly believe we make smarter choices when shopping with cash. Not having car payments allows you to stash cash rather than throwing your cash away at interest payments.

Free Your Budget to Save Big Cash

Over the years, saving so much money on cars has allowed me to accomplish more of my financial goals. Read how I became debt-free at 30 years old and learn more about my journey.

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