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# Calculate A Monthly Car Cost When Buying Outright To Better Weigh Your Options

The best part of paying cash for a used car is that you don’t have a monthly car payment. However, you may still want to calculate how much it costs when spread out over the time you own the car to know what your best options are next time.

Photo by Britt-Knee.

As personal finance site Root of Good explains, we think of monthly car payments in terms of how much loans cost, which can inflate how much we think cars cost. If you have to pay off a car in four years, your car payment will be hundreds of dollars. However, if you pay cash for a car and keep it for many years, the monthly cost of your car is actually much lower. In this writer’s case, it came out to around \$50 a month:

Here’s the maths behind my \$50 car payment. Buy a gently used six to eight year old car with low to moderate mileage for around \$8,000-10,000. Run the car almost into the ground and then sell it after nine or ten years when it’s 15-16 years old for \$3,000. The net depreciation (cost of new(er) car minus sale proceeds from older car) for those nine to ten years is \$5,000 to \$7,000 or about \$50 per month (\$6000 divided by 120 months = \$50/month).

The advantage of thinking this way is that it makes it much easier to think about how to buy your next car. If you were to start saving \$50 every month now, you may be able to afford to buy a used car with cash the next time you need one. Or, at the very least, you’ll have a sizable down payment.

Most of us think of our monthly car payments in terms of the loans that banks and dealerships offer us. This line of thinking has made us think of cars as much more expensive than they have to be. However, by buying used and spreading your costs out over the life of your car, you can make car buying less strenuous on your budget. It just takes a little planning ahead.

How to Score a \$50 Car Payment For Life [Root of Good via Rockstar Finance]

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