By Brandon Koll | Last Updated 8/18/2025
Do you own your car? If not, you are not alone. The U.S. has a total of $1.66 Trillion in car debt. It is crazy to think that this much debt is being taken out to finance an asset that for the most part only goes down in value. Let’s talk about buying cars and some of my recommendations. We can start with the fact that I have taken out many car loans in my life and why I feel that has really held me back from getting ahead with money.
My stupidity
I can say with a giant face palm that I have financed at least 10 cars in the last 27 years. Doing some quick math and guessing at some of the numbers, I’ve paid at least $30,000 in interest alone. This would be much worse if I didn’t pay off some of the cars in half of the time. At this point in time both of my cars are paid for, and I really hope I never again justify using a loan to buy another car. Now that you can see I’ve had to learn this lesson very slowly over many years, let’s look at those individuals that bought more car than they should have and felt stuck.
What to do if you are stuck with a car you can’t afford
If you happen to buy a car and realize that it is more (or for some, way more) car than you should have bought, let’s look at some things you can do. First you can buckle down and start paying it off as quickly as possible. Maybe you can cut back on your spending and throw that extra money at it. Or you might have some extra time to do a side hustle and throw that money at paying it off. If those are not options, you might be able to sell it and pick up a cheaper car.
What if you go to sell the car but realize that you are underwater $10,000-$15000. You are not alone, according to Edmunds, almost 25% of people that trade in their car are underwater. You could trade it in for a cheaper car and eat the difference, but you are almost guaranteed to lose thousands of dollars when you trade a car in. Another option is to sell it yourself and get a personal loan to make up the difference. I recommend the latter and getting out of too much car right away. Now let’s look at purchasing a car and the options that you have.
Used vs. New
When buying a car, the first thing to think about is whether to buy new or used. I personally prefer to buy a less expensive new car with great resale and a solid track record for lasting a long time. I’m not exactly sure why I waste money doing things this way, maybe I just love that new car smell. Unfortunately, after about 2 weeks of driving a new car, it becomes just another car that I drive from point A to point B and is not special in any way.
After recently looking at used cars that I would buy they are only $2,000, to $5,000 cheaper than a new car and are 1-3 years old with 30,000-50,000 miles already on them. Saving those years and all that mileage is worth the extra money. On the other hand, I’m not spending enough time searching for a great private party sale, which is where buying used is the better option.
Almost every finance book and finance article/blog that I’ve read recommends buying used cars. Yes, I’m an idiot and should have listened to that advice and saved a ton of money. If you really want to save money, find a used car from a private seller and get a great deal. Cars tend to depreciate quickly, so take advantage of that and buy a car after a good amount of that depreciation has already taken place. After you have chosen the right car for you, you will have to pay for it.
Cash vs. Credit
When it comes to buying a car, you can pay cash or finance it. My ten cents, if you can’t afford to pay cash for the car, you can’t afford the car. Stop making banks a bunch of money, just because you’re not patient enough to save up for a car. Instead of paying the bank $500 a month, why not pay yourself $500 a month and invest that money. Now instead of paying the bank 5-10% interest, you will earn 5-10% interest. This will enable you to buy nicer cars more often if that is what you want to do. To really save a lot of wasted money on those depreciating assets, drive them until the wheels fall off.
Driving it until the maintenance looks like a car payment
As I’ve aged, I’ve gotten better and better at keeping cars for longer periods of time. Not only have I financed a bunch of cars, but I’ve also traded them in long before they were in bad shape. Now my goal is to keep a car for 10 years or until the maintenance is getting out of control. Let’s say you have $500 monthly payments for the car. That would be $6,000 a year. My rule of thumb is, if you pay more the $6,000 a year on maintenance for your old car, it is time to get something newer.
Finance Hack – Always save up and pay cash for your vehicles
As you can see, there are a lot of things to think about when it comes to buying vehicles. The one thing that I want you to take from this is, do not waste a ton of money on a depreciating asset. Instead, buy the least amount of car you need until you are at a place financially where you have zero worries about money.
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