How We Purchased Our Car With Cash

We knew our Hyundai Accent car was starting to go. We had been making numerous repairs to it and it was getting up there in mileage. We had owned it for many years. It was a great car that had served us well, but with its age and size, we knew we needed an upgrade. We decided that we would need to get a new car in another year or two, so we devised a plan to buy our new car with cash. My husband and I did a few things to ensure we would not need a car loan.

We took our old car payment which was $300 a month and started stashing it in a high interest savings account on the internet. A high interest savings accounts like those offered by INGDirect or DollarSavingsDirect often pay more interest than a local brick and mortar bank. The other benefit of putting money in that type of account was that it was harder for us to get to since it was not a bank in our neighborhood. It helped us to keep saving and not tap into the money. We created an automatic savings plan so each month when we got paid, our car payment money went into the account. It was hard a first to get used to having to put that money away each month. We felt like we were making a car payment, yet we didn't even have the nice car! As the months went on, it became easier to put that money into savings and we didn't even miss it.

My husband and I agreed that we would take any extra money and stash it away for the car. We took any gift money that people gave us and put it in the bank account. We did some side jobs, like babysitting, taking online surveys and working overtime at our job. The little bit of extra income was an easy way for us to beef up that car savings account.

We also decided that we would not be purchasing a brand new car. Instead we would purchase a new to us used car that was only two years old. By doing this, we were able to get the car we wanted for much less! Instead of trading in our old beat up car, we sold it privately. This enabled us to get more money for it than we would have gotten on a trade in. We went out and negotiated on the new car we wanted to buy. We then came home and sold our old car privately that week. We took the money from the old car sale, the side income money and the money from our savings account and were able to pay cash for the new to us used car. It was an amazing feeling to pay cash! We didn't have to worry about interest rates, credit scores or knowing that we didn't really own our car. It was well worth of the planning and saving!