One Vehicle Payment at a Time

budgetting finance May 28, 2021

How many vehicles do you pay for in your household? One? Two? Three, if you include the trailer? Don't you wish you only had one vehicle payment at a time? 

2 or more vehicle loans simultaneously is a hefty monthly commitment. I have seen $1400 in car payments alone and when you add on insurance for 2 vehicles, transportation costs become more than your average mortgage!

Aiming to have only 1 car payment (or less) is an example of what I term "planned spending". This frees up cash flow for your goals and can be done fairly easily with a bit a forward thinking.


1. Instead of waiting to "need" a new vehicle, consciously decide ahead of time.  In my household the oldest vehicle would be the first to get replaced. For example, if my partner had a 2016 and I have a 2020 then he would be next to get a vehicle and we would take turns.


2. Make your payment amortization as short as possible. Finance for no longer than 4-5 years – ideally. In order for this system to work the other car still needs to be operable. Having a car loan for 9 years is a gimmick to make the sale as most would not choose to spend $75,000 of their hard earned money on a liability unless it felt affordable.


3. When a vehicle needs repairs, having made this decision ahead of time can help. If there are only 6 months left before new vehicle time, then you may be able to hold off maintenance or repairs unless they are absolutely necessary.


4. Knowing exactly when you are going to buy a new vehicle also gives you time to shop around. Don't forget to check the lemon aid guide before you buy and time your purchase for when you may get the best deals. December is a great month for negotiation and spring is just around the corner for you to sell the vehicle you are saying goodbye to.


Forward thinking is the key to great money management. It results in the least amount of cost, interest and fees which means the most amount of your money to live, not just bills. And of course the least amount of stress. Deciding to only have one vehicle payment at a time is a step in that direction.

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