Living Without a Car Payment Gets a Good Rap

Several years ago when online budgeting tools, such as, were introduced, I looked on with a sense of happy shock as budgeting suddenly became something very close to cool. Prior to that, the mere mention of the word “budget” was a conversation killer.

With their user-friendly interfaces and access-anywhere apps, online budget tools quickly attracted millions of loyal users.

In similar fashion, I’ve long championed a no-car-payment life, sometimes to the groans of workshop attendees. Keeping cars for 10-15 years, as car makers introduce many more appealing styles, can be a tough sell.

But just as Mint did the unthinkable with budgeting, some very unlikely sources of car buying wisdom have emerged: hip hop singers and pro athletes.

The no-car-payment life gains popularity

First there was Lecrae, with his song, Identity, in which he proclaims, “I’m not the car I drive.”

Then there were professional football players Ryan Broyles and Alfred Morris, who gained publicity by driving surprisingly inexpensive cars despite their multi-million dollar salaries.

And now there’s Dee-1, with No Car Note, singing about his 1998 Honda Accord: “I ain’t got no note. / I feel like a king not being in debt no mo. / I ain’t got no note.”

Far too many people do have a car note.

A note is the norm

According to Experian, more than 86% of all new vehicles purchased are financed, with the average loan topping $30,000.

More than 55% of used vehicles purchased are financed as well, with the average loan ranging from a little over $16,000 to nearly $21,000, depending on the type of dealer where the car was purchased.

If you borrow $30,000 at a typical new-car loan rate of 4.8%, your payment will be nearly $565 per month.

Please don’t shoot the messenger, but that math simply doesn’t work. Not if you’re going to live generously, have enough money to save for emergencies, be able to invest for future goals, and enjoy living with financial margin.

I spent a lot of time coming up with my recommended cash flow guidelines, and a car payment just doesn’t fit.

I’m not preaching from on high here. I’ve had car payments, but no longer. And I’ve leased a car, but never again.

A better ride

How do you break free from the cycle of financing cars?

It begins with a commitment. You just decide, preferably today, to never finance a car again.

If you’re driving a financed car right now, commit to a long-term relationship with your car (at least 10 years, but preferably 15) and as short as possible a relationship with your lender.

Keep your car maintained. I once ruined the engine of a perfectly good car by scrimping on the upkeep. So, make sure you budget for maintenance and repairs.

Buy used – usually. We own a 2010 Honda Accord that we bought in 2012 with 13,000 miles on it. We also have a 2004 Toyota Sienna that we bought new toward the end of 2003.

We were looking at used Siennas, but ended up buying a new one that was being used as a dealer demo, which brought the price down. Since it didn’t cost much more than the used one, came with a full warranty, had a fold-into-the-floor third-row seat as opposed to a pain-in-the-neck removable third-row seat in the used one—and since we were committed to keeping it for a long time—we went for the new van. Today, 13 years later, it’s still going strong. We’re planning to keep it at least another couple of years.

When you buy, factor in all of the costs. offers a helpful True cost to own tool that can help you compare the ongoing costs of various vehicles.

Hopefully, with the benefits of driving a paid-in-full car making their way into popular culture, more people will make that choice.

As Dee-1 sings,

“I ain’t got no car note. / That’s the way to be. / If you don’t know by now, one day you’ll see.”

If you’re still making car payments, let that “one day” start today by committing to never financing a car again.

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6 Responses to Living Without a Car Payment Gets a Good Rap

  1. Michelle November 19, 2016 at 9:11 PM #

    Gee Matt, I keep thinking I’ve commented on surely every topic we have in common! But I have to tell ya, we bought our new 1998 Honda Civic when we were young and unschooled on “no car note no more!” We drove it for 16 years…we brought our first son home from the hospital in it and he learned to drive in it and took his driving test in it. 🙂 We practically gave it to someone who really needed a car when the A/C was beyond repair. I often drive our 1993 Nissan truck and made a front license plate that reads “1993”. Young drivers wonder what it means because they can’t imagine a truck still on the road for 23 years ! From: Michelle near Memphis

    • Matt Bell November 21, 2016 at 7:33 PM #

      Great stuff, Michelle! Love the idea that the vehicle you brought your baby home in is the same one he learned to drive on. That really puts it in context.

  2. Paul D November 14, 2016 at 12:30 AM #

    Excellent advice! I would add one thing to the equation to help you decide how long to keep a car – the odometer reading. I can easily keep a car 20+ years (and have done so) because I drive them less than 10,000 miles a year. But if someone drives a lot, 10 years may be enough. If your car has so many miles that it is becoming a regular at the repair shop and expensive repairs keep happening, it may be time to ditch it.

    • Matt Bell November 15, 2016 at 9:40 PM #

      Couldn’t agree more, Paul. At some point, safety may become an issue as well.

  3. The DadMan November 10, 2016 at 11:08 PM #

    Matt, you’re walkin’ the talk with your Sienna at 13 y.o. Great article and lets listen to those songs next time we’re together!

    My Toyota Tacoma, as you know is also 13 y.o. but I am havin’ the identity blues at this stage and I may let someone else take it age 18!

    • Matt Bell November 15, 2016 at 9:40 PM #

      Mark – I know you have a lot more miles on your Tacoma than we have on our Sienna, so as your unofficial financial advisor, you have my “permission” to upgrade, as long as you don’t spend $35,000+ on a hybrid!

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