In 2003, my boyfriend financed me a brand new X-Terra, and I loved it. However, I paid a hefty price for driving it off the showroom parking lot. After we’d paid on my X-Terra for several years, I decided to upgrade. Much to my surprise, I had little money to work with in regards to a trade in. I’d paid so much for my X-Terra, and it quickly lost its lot value when I drove it away. I found myself with an X-Terra worth almost no more than what I’d paid on it. I needed to put up a large sum of cash to trade in my X-Terra to secure a newer vehicle. I quickly realized I couldn’t afford to do that, so I ended up keeping my X-Terra. About a year later, I ended up totaling my X-Terra in a wreck. Okay, so this should have put me in a new vehicle, right? Wrong.
The insurance paid off my X-Terra and paid me the difference, but this still wasn’t enough to put me into a new car for a reasonable price. What could I do? I couldn’t afford to pay big bucks upfront and then big bucks monthly, too. I decided to get smart. I shopped around at the reputable dealerships for a cash car. All I needed was a good, sturdy car to drive for the next year to help me save up enough money to get what I wanted. Luckily, I found a small, 2002 car at a major dealership, and the dealership wanted $3995 for it. I only had $3000, so I offered them the $3000 in cash. I knew the worst the dealership could do was refuse me, but they didn’t. The dealership sold me the car. I saved $995 upfront and drove the car for approximately two years. It finally came time for a new car, but the trouble was that I never managed to save any cash for a down payment.
This failed to deter my wanting a new car, though. I knew that I couldn’t afford to pay the price of a new car, but I wanted a car that was as good as new, so I began to shop the car lots via the Internet. Quickly, I found a car lot that could sell me a one-owner car that I liked. It had low mileage and a clean interior. The Carfax Report identified the car as a previous rental car, and the car had only 24,000 miles on it, which meant that it was still under warranty. I decided to try and deal with the dealership. As I suspected, the dealership could finance my car, but wanted a contribution from me. I told them that I had no money, but that I had a car with a clear title that I could give as a down payment. The dealership agreed to the deal. I managed to get a nearly-new car that was still under warranty, and I also managed to set my payments at a bit less than $300 per month.
I paid $3000 cash for a sturdy car that was priced at $4000. I drove the car for approximately two years, and I then traded the very same car in as an equivalent to a $2000 down payment for my new, one-owner car. The bottom line is that it only cost me $1000 to have a sturdy vehicle for two years, and I still held something valuable enough for a significant down payment on another vehicle.
Secret to Saving Money on a Car
Use cash as leverage to bargain with a car dealer.
Get some use out of the car you purchase for cash and then use the car as a down payment for another one.
Never buy a completely new car. It loses too much value once driven off the lot.