A Stack of $100 bills
“I bought a new car because I needed something reliable”
“I’d rather have a car payment than a repair bill”
“My family needs something safe, so I need a new car”
I can’t tell you how many times I’ve heard people make these comments. But it’s the wrong mentality.
Before I share this story, I need to let you in on a little secret. Actually…two little secrets. The first one is I’ve used loans to buy cars. And I know how much the payment can be if it’s a new car. The second secret is that because I know how much a new car payment is and how much a new car drops in value, the newest car I’ve owned to date was six years old.
So here’s my story…hopefully it will inspire you with your future car buying endeavors.
When my wife and I got married 4 1/2 years ago, we immediately began planning for vehicle upgrades. Not that we intended to go out and buy a new car right away, but we wanted to be prepared. You see, I came to the marriage with a 9 year old Ford Escape and a 12 year old F-150. Both were paid for by the time we got married and both were in great shape, each with around 130,000 miles. Now to some of you, that’s a lot. Trust me..it’s not.
My wife was fortunate enough to have a company truck, also an F-150. And we intended to use that for most of our travel, in order to keep the mileage down on our personal vehicles. That way, I could keep my Escape for my work and my truck could be used on the farm.
But we knew that she wouldn’t stay in that role, and eventually we wouldn’t have a company truck at our disposal. And a 1/2 ton extended cab pickup is difficult to keep around for long when you need a farm truck that can haul a family.
What made our situation different, though, was the fact that we refused to go into debt on a vehicle. It’s just wasn’t an option. Especially when rates are typically 4-6% on an item that depreciates faster than the sand runs through an hour glass. I mean, it just didn’t make any sense!
Still, the reality was that we would need to be prepared to spend several thousand dollars to get a new(er) or at least bigger truck. So…we started saving money. To the tune of over $800/month. We did that for about 2 years and finally had enough saved to buy a truck with cash.
It was a challenge to find the right vehicle though. We had a budget and we had a set of criteria. And it was hard to match the two together on the same truck. But we looked, and looked, and looked. I spent about 6 months shopping online for the right truck. But never could find a good match. If it was in our price range, it had too many miles or too many problems. And of course the nicer trucks were just out of our budget. I kept thinking to myself “If only I had another $2,000”. But I didn’t. So I kept looking and waiting.
One day, I came across a Craiglist ad. It was a 2001 F-250 crew cab with 184,000 miles. It was a 7.3 diesel and it was in my price range. I made contact with the dealer and he put me in touch with the original owner. After a good conversation I felt the truck was worth investigating further.
My wife and I were able to test drive the truck on our way to see family for Christmas, and long story short, it didn’t take long to know I was going to make an offer.
So on Thursday afternoon that week, we stopped by the dealership. Now I’m the kind of person that likes to get a good deal. And I like to think I’m a decent negotiator. So I was kind of excited to see how well I could make this transaction go.
We looked over the truck one more time and I popped the question “What’s your bottom dollar?”. To my surprise, the dealer immediately dropped his price almost $1,000! But that was still more than I intended to pay. So I stood there and kept quiet for about 10 seconds. Then I told him “I can’t do that. It’s too much”.
He asked for my counter and I threw out the low anchor number. You know how it goes. Start high and drop or start low and come up. The negotiating continued as he dropped his price again…this time a little closer to my comfort zone. But of course, I wasn’t about to let him have the final number. Yeah, I’m competitive like that.
So to bring the final decision to light, I made him a cash offer. He pushed back, but he didn’t say no. That’s when I knew we were getting serious…and it was time to make my final move. I had 3 options…I could walk away without the truck, I could accept his price and drive it home or I could twist his arm with a handful of cash and close the deal on my terms.
I decided to get brave and take my chances. My wife handed me a stack of $100 bills and I walked inside the office, laid the money on the table and said “I’ll give you one more chance, $xxx cash”. He looked at the money, sighed to himself and said “You’re gonna make me do it aren’t you?”
My wife and I drove home that day with a lot less money in our pocket but a lot more excitement in our lives. We were the proud owners of a new (to us) truck and we didn’t owe anyone a dime in the world for it. It was ours. Paid for in cold hard cash and negotiated to the best deal.
Now remember, I’ve had car loans before. I’ve had to make payments to the bank and I’ve been tight on money because I owed it to someone who helped me buy my transportation. I’ll never go back there again. It took us a long time to save up the money. It took us a long time to find the truck. And it took a lot of miles to drive it back home.
But it’s mine. All mine. I don’t have to worry about making payments on it. I don’t have to worry about it depreciating. I just get to drive it until I want to sell it!
What would your life look like with no car payments? Imagine if you just saved up the money and bought a car (or truck) with no debt tied to it. Two things happen when you do that. 1) You don’t pay even more for the vehicle due to interest, and 2) You almost always get a lower price because you have the power of negotiation on your side. You have the money and they have the vehicle. If you can meet in the middle on how much of the money they’ll take in exchange, you can both benefit from the transaction!
It’s an idea that people don’t believe in. Everyone thinks you have to have a new car, or at least a car payment. And it’s such a fallacy that I could write an entire book on it. But instead I’m writing this somewhat lengthly blog. In an attempt to show you that car payments are NOT the only way to buy a vehicle. And if you want to attain financial freedom, a car loan is one of the biggest obstacles standing in your way.
So take my advice, learn from my story, get inspired by my honesty and commit to never borrowing money for a car or truck again! If you have a loan, you can pay it off or you can downgrade to a car paid for in cash. And I can help you accomplish your goal.
Don’t get sucked into the car payment crisis! Own your car free and clear–if you need help getting there, schedule a free consultation and I’ll walk you through the process used by millions of people JUST LIKE YOU!