Debt Nation: Car Loan? Not So Fast! How To Buy A Car Without Getting A Loan


Are you planning on buying a car? Think before you go for that car loan. The banks and the car dealerships make it look so easy and pain-free. All you have to do is fill out some forms, submit a few documents, and wait a few days.

Trust us when we say there is no suspense in waiting. They want you to get the loan. The monthly amortization you pay every month is recurring income for them. Meanwhile, every time you take your car on the road, you run down its value.

A car is a depreciating asset. When you’ve paid out the loan, you would end up paying so much more than what the car is actually worth. Does that make sense?

Of course, we’re assuming you can pay off the loan. But what if you can’t? What if your car loan puts you in a bigger debt trap that drags everything in your world down with it?

The good news is you don’t need to get a loan to buy a car especially if you are buying a second-hand or used car. This is a cheaper alternative to a brand new one and some used cars are almost as good as new.

Despite the cost, it is possible to buy a car with cash. Here’s how:

  1. Determine the Type of Car You Need

People buy cars for different reasons. In most cases, cars are viewed as necessities instead of luxuries. Ask yourself why you need a car so you can determine the type of vehicle that you should buy.

If you’re single and need a car to go to work or school, a small-sized sedan should be right for you. A wagon or an SUV may be more appropriate for a family. Those who live in places where there is snow should consider a 4WD vehicle.

A used car will definitely be cheaper than a brand new model. Just because it is second-hand, and in some cases fully depreciated, does not mean you will buy a lemon.

The best thing to do is to perform a survey. Visit the most reputable used car dealers in your area and get quotations from them. Used car dealers are open for negotiation. The sedan may actually fit your budget.

  • Draw Up a Time Table for the Purchase

Once you’ve gotten the quotations from the used car dealers, draw up a time table for the purchase. Create an income statement and find out how long it will take for you to purchase the used car of your choice.

Depending on your streams of income, it may take you months before you can buy the car. It is important to generate savings every month. From there, you can set aside a portion of your savings to finance the car.

  • Be Ready for Some Lifestyle Changes

If you already have a car, why not sell it to finance the purchase of the new car? Some used car dealerships accept trade-ins where the balance can be paid out in cash.

If the proceeds of the sale will not be enough to purchase the new car, you may have to incorporate changes in your lifestyle in order to generate more savings.

For example, you may have to bike to work, cut off your gym membership, sacrifice the daily double espresso at your favourite coffee shop or brown bag your lunch to work every day.

Whatever it takes!


There are the obvious risks to buying a used car. However, these risks can be mitigated. First, bring a professional mechanic with you to examine the car. Second, test-drive the used car before buying it. Finally, ask the car dealer if limited warranties on parts and services are available.  

Think about what we said earlier: a car is a depreciating asset. You might want to consider getting a used car instead of a brand new one.

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