It’s better to be debt free than owe money.
I’m talking everything: your credit cards, student loans – even on your home.
It can be done – if – we make the right choices.
Regarding auto loans: if you have a choice, pay it off ASAP!
Owning a car is expensive enough without a loan
Owning a car comes with many expenses: gas, insurance, registration, taxes, maintenance, care, and repair. Together these can total several thousand dollars per year. But throw a monthly car loan on top, and you have thousands more.
The secret to success? Pay cash for cars and save money for their regular care. If you take care of them they’ll take care of you.
If you lose your job, it’s one less payment
Living light never feels better than when you lose your job. Suddenly income evaporates (or is lowered to the level of an unemployment check) and one of your primary new tasks is to cut spending. If you own your car, one major expense is already out of the way.
In today’s unstable job market, this is a goal worth making reality!
The RISK of not making your payments
Most of us take the risk of auto loans a bit too lightly. After all, stop paying your credit cards and you may get nasty phone calls and a series of threatening letters, but nothing will be taken from you, at least not for a while. Stop paying on your mortgage and you’ll get to stay in the house for as long as the slow wheels of the foreclosure process will allow.
But – stop making payments on your car, and you’ll lose it, and quick!
If you lose your car you’re probably not able to earn a living. Do you see the vicious cycle here?
Never take this risk of borrowing money lightly.
Own important things free and clear, whenever possible
Call it peace of mind or whatever you want but owning things without debt is as a sanity issue.
If everything you own has a loan attached to it, life can be maddening. Debt is everywhere you look—even when you’re out driving your car.
A debt free car is like a mental and emotional oasis, it’s one very important asset you can own free and clear, and we all need as many of these victories as we can get.
Keep your options open
Few things in life are constant.
As we go through life, our circumstances change, our directions change, and even we change. Even if you have no intention of it, your future can hold an unexpected life change.
If change does come – trust me – you’ll be better served by having all of your financial ducks in a row. And owning your car free and clear is one great way to prepare.
Benefits of owning your vehicle
Owning your vehicle free and clear benefits you in several ways, including but not limited to:
Sell your car. A car loan is a limiting factor if you should decide to sell. Auto loans reduce the amount of money you’ll clear on the sale ,and (if the loan is large enough) could even render the sale impossible.
Buy your next car. A loan means less money from a sale or trade-in, and that means a lower down payment on your next car.
A lower down payment means an even larger loan on the new car, and the cycle of ever higher car debt to continue. By being debt free on your car, the cycle is broken.
Start a new business. If you want to start a new business, being debt free on your car makes it easier. It’s not just one less bill to pay, it’s also one less obligation to worry about. If you start your own business you’ll want the fewest obligations possible.
Accept a lower paying job. There are at least two reasons this could happen, 1) you’re laid off and forced to take a pay cut, or 2) you move into a job that you really like but it pays less. The car loan, so easy to handle at your current pay level, may be impossible to manage in a lower paying job. By owing your car you’re in a position to move when you need or want.
Raise children at home. How much easier would this be to do if you owned your car debt free?
Just to take some time off. Each of us need to do this from time to time, especially between jobs or before starting a new career or business venture. It’s a way of clearing our heads before the next big move. Whatever the reason, it’s easier to do with no car loan to worry about.
We should work to be debt free in as many areas of our lives that we can – but – your car is one asset to be especially motivated to pay off.
Once you do, many risks and burdens go away, trust me!
Can you see why being debt free on your car is so important? Do you see why it should be one of the first debts to pay off?