This piece is part of my 2016–2026 archive migration. Some original formatting, content, and external links may be missing, changed, or not be optimized.
Car payments are traps
My first car purchase happened in college for $14,000. Yes, it was more car than I could afford; still, I managed to pay off the car in 3 years instead of 6.
Despite my financial ignorance, there was still one thing I knew for sure: there was no way that car payment was going to be in my life for six years. Consequently, I consistently made extra payments; it helped that my financial obligations – outside of student loans – were few.
The price of my car haunted me from the day of purchase; I knew I overpaid. Moreover, I was ashamed of how much I actually paid for the car. To erase my mistake, I was committed to paying the car off early to eliminate paying even more for an overpriced car.
Cars are sitting cash deflators. Invest your cash instead to inflate your networth.
For three years, I made extra payments when possible.
After receiving the first paycheck from my 1st corporate full-time job, I made a final lump sum payment.
I was proud to have managed to pay off the car in half the pre-determined timeline while not even holding a full-time job for 99% of the time I owned it. It was a priority to get that sucker paid off after receiving my first full-time paycheck.
One of the best feelings in the world was getting that car title.
Lessons I Learned From Paying My Car Off Early
Think more than twice before making a car purchase.
Do your research so you don’t end up overpaying for a car.
Never fear the art of negotiation, something I’m confident doing now.
Follow the 1/10 rule for car buying; it will save you plenty of trouble and money.
It’s better to ride a piece of trash than to throw away money that could be working for you in an investment account.
If you take out a car loan, make extra payments, so you end up not overpaying exponentially for a quickly depreciating asset. Remember, cars are already overpriced; don’t throw away more money. Some people can afford to throw money away; most people can’t.
Biggest Lesson: If you have to get a car payment, pay the car off early. Don’t get comfortable with maintaining a car note. This is a trap most people fall into consistently.
What I Will Do Different For The Next Ride
Prior to buying the next car, I have to meet a few self-imposed criteria before buying, which include:
Maintain a positive net worth after the car purchase
Maintain no car payment for at least five years
Be able to buy my car in cash if I wanted
Ride my car for at least 200k miles
Wanting to buy the car.
You should consider having a few things in place before purchasing your next car, too.
Many people buy their next cars on a whim – without thinking strategically or considering the financial implications.
This content is for informational purposes only — not professional advice. Consult a qualified professional before making any major decisions.