[Damaris]

My frugal tip:
Started making car payments to myself in a separate high yield savings account in 2019, between 500-1000 (depending on what I could afford)

Purchased my new and paid off the financing balance in 1 month to avoid the $1000 penalty for paying in cash.

Total paid in interest was $156

[Nancy]

My late father-in-law said “after you pay your car off, keep making payments into your own account as if you have a car payment and then buy your next car for cash “. Smart man.

I miss him.

[Diane]

I did this but we don’t have a penalty for paying in cash! Thank goodness!

[Annette]

Well done!! What a good idea! I paid off my curent car in spot on one year, I made more by taking the 2k incentive than I did taking the no interset option, total interest paid was less than $200.

[Deborah]

Awesome!! Good job. I paid my 2002 Honda off in 2007…. Still driving it today 169k miles.

[Tasha]

I have never had a penalty for paying cash. I work out all the deals on the price before I ever step into financing though

[Julie]

Even better to buy a car that’s only a year old with low miles. I’ve had 4 new cars in my lifetime. Never again.

I’ll only buy late models from here on out.

[Nadja]

Please check out Infinite Banking. You’re almost there. Congrats being so smart with your money.

[Kim]

Car depreciate why would you use your cash to pay off a car when you can put that cash in investments.

That is crazy!

[Melissa]

For those that don’t get the penalty for paying cash (most dealers won’t tell you it’s a penalty, you just won’t get discounts that normally would be given) is because they make their money when you sign a loan.

They get more of a kickback from the bank when you do that, and a larger overall commission.

They dissuade folks from paying cash by making it less appealing.

[Deneen]

I have finally been able to do this at 50. This is so smart and I wish I would have been told to do this years ago.

[Kristi]

They will give you a better deal on the car because they make money on the loan.

When you are negotiating be sure there is no penalty to pay the loan off early, and you can pay it off that week.

I have done this.

[Lisa]

This is the one piece of financial advice I give everyone: As soon as you make you final car payment, have that sane amount transferred every month ti a savings account that is ONLY for two purposes: Major car repairs (but standard, scheduled services, tires etc) and eventual car replacement event.

Never pay interest again for a car.

[Gemma]

I’ve made “ghost” car payments for years in order to buy without borrowing.

[Lisa]

We have always “saved up” for vacation, cars, emergency fund for appliances that break. Just a note: don’t get your credit extended to buy a car and get the “kickback” 2 or 3 per cent.

They will only let you charge $5000. Which we did but disappointed not to get to charge the whole thing, then pay it off immediately.

Then we had to cancel our high credit amount as we were wary of fraud.

[Kirsten]

I earn more keeping my cash invested than my cars interest rate. It’s only 2.25. Depending on the financing you can get it actually doesn’t always pay to pay off that car loan

[Jennifer]

I throw a good chunk of my savings each month in a HYSA and just track separately how much would go towards each goal.

[Donielle]

Thank you for sharing this!! I currently have two car payments and one for sure the amount I owe is way over what the car is worth.

I’ve decided I will drive these cars until I can’t anymore.

I’ve always want to pay cash but I’ve heard they will almost always force you to finance.

I unfortunately am not the best saver, but have wondered how to set money aside and what a good amount is and such.

Although I won’t be able to use this advice probably for a couple years I definitely appreciate you sharing, because it gets my brain going.

[Author]

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