Buying a car with cash

By Alyssa, December 23, 2011 11:58 pm

Is buying the car you always wanted with cash possible? Is it feasible to live without car loans? Yes, but it takes some work. Our planning started a little more than three years ago. In the summer of 2008, we owned a 1998 Toyota Camry and made payments on a 2005 Toyota Tundra at $400 a month and payments on a 2007 Subaru Legacy at $250 a month… $650 worth of car payments per month. Buying into the car payments for life nonsense, we planned on selling the paid-for Camry and keeping our “new” cars. Then sitting in our Dave Ramsey Financial Peace class, we watched this video:

Even if we didn’t get a 12% return on our money, we liked the idea of cars for free. With my decision to stay home with our kids, we didn’t need the third car we were lending to a nanny, but why sell the payment-free car? Convicted, Haus made the final call. Although he loved his Subaru, he decided we were done with car payments. We sold the Subaru a month later and set a goal to pay off the truck loan by the end of the year.

It was a lofty goal but we were “gazelle intense” as Dave Ramsey would say. It seems miraculous looking back, but we were able to pay off the entirety of our Tundra loan in less than 6 months, almost $18,000, and started 2009 with no car payments. We loved both of the cars even more knowing we owned them free and clear. The real pay off came when we decided to look for our first big cash purchase, a swagger wagon.

After finding out in January we were pregnant with number three and realizing three car seats wouldn’t quite fit in the back of the Camry, I started scouring the internet for a Toyota Sienna. And not just any Sienna. I wanted an XLE with leather seats and All Wheel Drive (AWD) preferably sold by a private owner instead of a dealership. I searched and searched and almost gave up. We had the cash which felt like it was burning a hole in my pocket, but, because it was hard earned cash, I really wanted to wait for a good deal.

With my due date in October looming, I checked Craigslist for the hundreth time at the end of the summer and was shocked to find a potential vehicle. A private owner in north Denver was selling a low mileage 2005 Toyota Sienna XLE AWD for a really great price. We arranged to meet at our Toyota mechanic to check out the van. I don’t buy a ton of cars, but I’m so glad I had our trusted local guys check the vehicle out for us before deciding to purchase it, especially knowing we would be dropping a lot of cash. Our mechanics gave us the green light. The only outstanding issue we saw was a dent and scrape on the rear right side panel which was part of the reason it was being sold at such a low price.

We negotiated for about a week and our luck seemed to continue as we realized that the owner was retired Army and even more apt to sell to us when he realized I was in the Guard. Paying with cash was a little tricky as we don’t have a local bank, but luckily we used the same military credit union as the sellers and ended up being able to transfer the agreed upon $14,000 from our account to theirs.

Two years ago if you would have told me I would be able to drop $14,000 cash for a car, I would have laughed and told you that was crazy. But we are proof that it is possible. It was sad to sell the Camry after ten years of use, but I am loving my upgrade to heated leather seats and All Wheel Drive. Cool thing now is that we know without a doubt we will never make a car payment again. Ever. We paid cash to fix the swagger wagon’s dents and Haus detailed every inch of it so I don’t see any reason why we won’t use our “new-to-us” van for the next ten years.

Inspired to give up your car payments? I hope so. Pay off your current car, save up the cash, and wait for a deal when you want a new vehicle. It’s worth it!