Buying a car with cash is always going to be more money smart than taking out a loan. Simply put, since the value of your car depreciates over time, why would you get a loan to buy it with interest that accrues over time? Of course, many people cannot afford to buy a car with cash in hand, however most of us have a lot more money for car buying than we think. Here’s how to buy a car without going into debt.

Do your research and compromise

The first step to buying a car is always to do your research. Research in-depth the makes and models that you prefer and when it comes to not going into debt, always be willing to compromise. Ask yourself whether you’re willing to sacrifice the style or type of model to get a better deal. Once you’ve selected a few makes and models to choose from, you can start comparing. Compare the models on price point and factor in fuel efficiency as well as how common a model it is. The more common the model, the cheaper replacement parts will be.

Buy used

Simply put, the easiest way to buy a car without going into debt is to buy used. If you’ve been researching new models, take a look at previous years’ versions of the same make and body. Even buying a year old car is going to be vastly cheaper than buying new. Remember, cars depreciate by about 20% as soon as you drive them out of the dealer. That’s a huge cost you’re forfeiting by buying new. If age is a big factor for you, then simply buy a newer used model, however the older you get the cheaper it will be (with the exception of buying classic cars of course).

Start saving

If you don’t already have enough money in the kitty to buy an older used vehicle, or you’re after something a little more modern, it’s time to start saving. Start saving as soon as possible. Once you’ve decided on the type of used model you’ll be buying, it’s pretty easy to calculate the average cost of the vehicle. You’ll also need to factor in how much your insurance or registration will increase if you’re going to be buying a newer model.

Sell your current vehicle

So long as you’re not saving up to buy your first ever vehicle, you should have another one to sell before buying. Don’t trade in your vehicle as dealers will only pay a fraction of the cost of what you could sell your old car for yourself. Instead, list your car on online classifieds, car sites, forums and make sure to put a for sale sign in your window with your phone number on it. You’ll likely find a local buyer willing to do you a good deal. Do your research and compare what similar models are going for in the area, taking into consideration age, make and mileage.