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As a millennial, I can attest that most of my peers and I were raised in an America that promoted going into debt. College, car, house. Hamster wheel to the max. If you’re like me, you’re getting a bit tired of the dang wheel. I love cars, obviously. And while I won’t say that I’ll never have a car loan, I can proudly say that the hubs and I have never had one to date. Here’s how we’ve avoided a new car payment into our late thirties.

Lower your immediate expectations

Keep in mind that these concepts aren’t restricting you from owning your dream car; rather, it’s getting away from going into debt for it. What’s more, once you realize how much of a mindset shift this takes and the freedom a lack of large car payments gives, you might find lowered expectations liberating.

For many of us, driving started with something humble until we could “afford” the car note.

As a teenager, I was lucky to begin with a 1986 Jaguar XJ, which I immediately wrecked…moment of silence for it, and the ’70s Mustang I merged into, please. After, I landed in an old pine-green Toyota Camry. Not the new Wrangler or Jetta other Y2K kids were whipping around town, for sure.

Now that everyone reading this is likely fully grown, separating your car buying needs from wants is difficult but really helpful in avoiding a car payment. The trick for my husband and myself was just stepping up our used cars over time, mostly when absolutely required, and never taking the big leap into a payment.

For instance, you might think you need a truck. Let’s dissect. Don’t get offended here, I’ve had trucks and will always want to be driving one, too. Are you able to pay cash for something you want? Great, go for it. If not, think deeper. Do you need one or want one? Does a friend or family member already have something you can borrow if you need to haul something four times a year? You might even look into renting a truck or van for those times versus paying extra every month for the loan, fuel, insurance, and maintenance on a vehicle you’re not fully utilizing often.

This expectation setting doesn’t mean abandoning your wish list. It just takes time and intention to get there without paying tons of interest. You might find waiting for the right opportunity very fulfilling.

A man's hand holding out a wallet with cash bills in it in front of blurred background with a white car
necati bahadir bermek via iStock

Determine your realistic “now” budget for a car, even if it requires a small loan

If you literally have no savings, the last thing you should do is go out and get a big car payment. Get a good used car “now” and save up for “later.” If this means taking out a small loan so you can safely exist in your daily life, fine. But please, pick a reasonable car for your situation and keep the loan payment as low as possible.

Settling for an affordable and reliable car that’s relatively easy to pay for now will only benefit you in the long term. Even if it isn’t your dream car, keep it clean and take care of it so you can easily resell it when you’re ready to upgrade.

If I were in a pickle today and needed a reliable used car and had to get a loan for it, I’d find a used Toyota, Lexus, or Acura. Yep, we’ve got kids. They can fit in the back. What’s wrong with a sedan when you’re avoiding a large car payment?

Pay a car loan off as quickly as possible as long as it doesn’t hurt your overall financial health

Once you find your way into any car loan, determine your overall financial health before paying off the loan ASAP.

Do you have an emergency fund with one month of living expenses saved up? Next, it’s six months of living costs. After that, if you have higher interest debt than your car note, focus on that. If the car loan is your next highest-interest loan, you might be able to pay down the principal. Check if your lien holder accepts biweekly payments to pay an extra month off each year. Review whether the entity will “punish” you for loan prepayment and whether that will hurt you more than necessary.

You might also be able to sell your car to get out of the loan. Only do this if the next car really solves something important to you, like lowering or eliminating your car debt.

If you think it’s hard to avoid a big car payment, well, it can be at first. If you’re still combing through listings for your dream car once you’re on the zero payment path, start saving using the above concepts to get into that vintage Bronco faster (or insert your dream model here). Next, read about how expensive new cars really are for Americans these days.