Ah yes, I can feel it in the air. Early spring. Home and car buying season.

The dreaded car note. The average car payment is now hovering around $400 or more per month.

Here’s what you can do to get rid of your car payment and where you can put that money now that it’s not being spent on a car.

Get a shorter term. Many dealerships offer 72 month terms. I see this advertised all the time whenever I research or look at purchasing a vehicle. Hogwash. You can get a car loan for less than five years. If you want to be out of debt sooner rather than later, buy a less expensive car and finance for four years or less. Preferably three as once this year comes up and is marked off the calendar you can’t stand writing out the check anymore.

Use a zero percent deal. There are dealers and credit card companies that offer 0% financing deals. The catch is that you have to pay it off with 12-15 months on average. However, if you start here, you pay less interest over the life of the loan. Better yet, if you can pay it off during this time, your done and can tell the car company to honk that horn where the checks don’t shine.  

Save up and pay cash.  I know what you’re thinking. Can’t be done right. Well, it can be. It just takes time and discipline. For instance, pick out a car, write down the price, and set a goal of 5 years. Do the math and figure out the how long it will take to save up the money monthly. For example, a $20,000 vehicle will require you to save $334 a month for 5 years. Then you can walk into the dealership and pay cash!

Invest your money in stocks instead.  Now that you don’t have a car payment, you can put that money to work. Check out some IRA’s and mutual funds with an investment company. Money not spent can become money that interest is earned upon.

Beef up your rainy day fund. It’s a jungle out there. Anything could happen so you best be prepared. Take that $334 and start socking it away in savings. Do this for three years and you will have saved $12,000! That could be a down payment on a home.

Donate.  There are many organizations and people out there who need help. You can decide to feed the hungry or become a genie and grant wishes or set up a scholarship fund. No matter what you decide it can make a difference in someone’s life. The best part is that when it comes from the heart you feel good too.

Outside of a home, one of the biggest expenses for most people is a car. A car can help you get to work to provide for your family, allow you travel long distances at your leisure, and give you a sense of freedom. However, spending too much on cars can lead to debt accumulation and this could negatively impact your net worth.

I call those who would rather drive the fancy car and have no emergency saving – Autoholics.  My definition is the buying of automobiles that are more than you can reasonably afford which results in problems.

I have known people whom both would lease and buy expensive vehicles. To most of their chagrin, the price of that freedom on four wheels was not worth it.

The moment you drive a car off the lot it goes down in value. Therefore, if you brought the car back within 1 hour of purchase the car would be worth less than what you just paid. Because of this a car is a depreciating asset, and must be chosen carefully to avoid having consistent negative equity in a vehicle over the course of your entire driving career.

If people are not careful, you could easily spend anywhere from $50,000 to a couple hundred grand on cars in a lifespan.  Those numbers do not include maintenance. That’s right, just the sticker price!

I am not saying not to buy a car. What I am saying is to choose what cars you buy carefully as you do not want to have a car parked in your garage that you cannot afford to fix because the repairs cost $8,000. And that number is not a typo, I actually knew someone who owned a BMW and that was the repair cost.

I have seen people paying $300, $400, $500, or even $600 car notes for five or more years. I actually know someone who has had a car payment almost her entire adult life. If you added those amounts up, it would be some pretty big numbers.

If you were to invest $100,000 in the stock market, with a return of 8%, you would have a million dollars in 30 years.  Even a $10,000 investment would net you $100,000.

With the average price of a car, even used, being $10,000-$20,000 thousand dollars it is worth considering cheaper alternatives. When the goal is to build wealth and have financial independence, then instead of choosing an expensive car go for the one that is more practical but still looks pretty decent on a postcard.  But the best looking car is the one that’s paid for no matter what brand it is.