Buying a car can be one of the more expensive things in life. If you don’t think it through, you could end up paying way more than needed. The average price for a new car is over $36,000. In this article, I’d like to take you through the steps I’ve taken to pay less than $10,000 for any car I’ve owned while still buying good dependable ones. Debt-free car buying speeds up the journey to financial freedom.

Last time I bought a car was around a year ago. A 2001 Toyota Tundra. While this definitely isn’t the most economical vehicle, I still got a good deal. I didn’t even know about financial independence a year ago and just wanted a truck so I could haul stuff whenever I needed to.

If I were to buy a car today it would be something small that saves on gas. It’s actually a good thing I got the truck though because we want to get a camper and start traveling more. I can also use the truck to resell appliances and have made an extra $385 in the past couple of months from that alone.

Okay, enough justifying my oversized vehicle purchase. Let’s look at how I purchase cars and the techniques I use to save money.

Step 1: Determine Which Car is Right for You

Factor in the amount of people you’ll usually be hauling. If it’s usually less than 5, then the biggest car you need is a 5-seater sedan. The next thing you want to look at is the reliability. Since you’re going to be buying a used car, it’s important you make sure the reviews are good in the reliability category.

I’ve been driving Toyotas for the past 5 years and have never had to do anything other than regular maintenance on them. My sister is still driving the Toyota Celica I gave her and it’s pushing 300,000 miles. She did have to replace the clutch but that was after I had drove it 100,000 miles. The next thing on the list is fuel economy. If you’ve determined a small car will be more than enough vehicle for you, most cars in this category easily get 30+ mpg. If you need something bigger, make sure you put reliability first, then fuel economy second.

Next thing to think about is how much you want to spend. Obviously, the less money you spend, the riskier it becomes. I bought my Toyota Celica for $3,200 and was taking a chance. It had 159,000 miles on it and I put 100,000 miles on it without it ever breaking down. While you’re taking a chance when buying cheap cars, stick to the reliable brands and you should be fine. $5,000 will easily buy a small, dependable ride.

Lastly, are you sure you even need a car? They’re incredibly expensive, even when you buy them for cheap. If you live close enough to work and a grocery store to ride a bike, you’ll probably save a lot of money in the long run. Even if you use Uber a lot, you’ll most likely save money riding Uber when you need to and not owning a car. If a bike won’t work, what about a scooter?

Step 2: Save the Cash

After you’ve decided on a few cars you’re interested in, look them up on Kelley Blue Book. This will give you a ballpark price and let you know what year model you can afford. As a rule of thumb, I’d never buy anything newer than 3 years old. The first couple of years are when the car loses most of its value. I’m talking like half the cost of what it was new!

If you’re going to buy a car without going into debt, you obviously need cash to do it. If you can’t save enough with your regular income, think of something you can do on the side. I’ve profited $2,440 since I started reselling stuff 3 months ago and it’s super easy. You may even think of a more lucrative side gig.

“But my car broke down and I don’t have any money saved. I live too far away from work to walk or ride a bike. Debt is my only option, right?”

Wrong. There’s always another option besides debt. If you look hard enough, you’ll find a way to get to work until you have enough money for a car. You can buy a good enough car for $1,000 to get you to work and I bet you’ve got $1,000 dollars’ worth of stuff you could sell right now. You may even be reading this on a $500 iPhone…

Why should you avoid debt when purchasing cars? The thing is depreciating at a rapid pace. Most of the time you’re going to be paying interest on it. Depreciation + interest = a massive loss of money! The goal should be to buy a car that has depreciated a lot but still has a lot of life left in it.

Step 3: Start the Search

Now that you’ve done your research and saved the cash, it’s time to start looking. I would start looking in the private market and see if there are any good deals on Craigslist, Facebook Marketplace or Letgo. Just make sure you meet the seller in a public place. Too many crazies out there nowadays to take a chance.

Most of the time you’ll spend less money if you buy from a private seller vs a dealership. When I bought my truck, it was actually a rare occurrence and was a better deal than anything I’d seen but it was at a dealership.

So, you know what car you want and how much you want to spend. All you need to do now is punch in the make of the car and set the filter to your max spending limit and see what’s out there. If you can’t find any good deals on Craigslist, Facebook or Letgo, or you’d just like to compare what you found on the private market to dealerships, here are the best websites I’ve found for that.

Cars.com is a decent website for finding cars at dealerships. Here’s the criteria I punched in for my Tundra.

I didn’t want to spend more than $10,000 and I didn’t want it to have more than 150,000 miles on it.

They didn’t have but one listing that met this criterion and there weren’t any pictures of the truck in the listing. You always want there to be a lot of pictures. Oh, and I only had the search radius set to 20 miles of my zip code! I’d set the search to at least 100 miles. If you have to drive to another state to buy the car but you save $1,000 it’s worth it!

Cargurus is another solid option. I think it’s the website I found my truck on if I remember right. Here’s what their search filter looks like.

I like their search filter a lot! You can even set it to the maximum mileage you want on the vehicle.

Autotrader has been around for a long time and is another good place to look. They have filters much like the other websites and you can really narrow down your search. It’s important to set the maximum price filter to the maximum you’re willing to spend. Looking at cars out of your price range is pointless so you shouldn’t do it.

TrueCar is another good website. I’m sure there are other websites out there, so you can always just search something like this in google. “Used Toyota Tundra for sale near Dallas, GA” and see what comes up.

Step 4: Start Test Driving Cars

After you’ve found a car that looks like a good deal, go test drive it! I’d like to point out that I don’t think you should do your searching for cars in person. You should do all the searching online and once you’ve found a good deal, go and checkout that car and that car alone. Dealers will always try to talk you into looking at more expensive options so it’s best to know what you’re there to look at and tell them no to anything else.

Seeing a car parked somewhere that’s being sold by a private seller is fine. I just don’t think it’s ever a good idea to go wandering around a dealership car lot.

Step 5: Find as Many Flaws as Possible

Once you’ve found a car that you think you might want to buy, find as many things wrong with it as you can. It’s easy to overlook things in the excitement of test driving a car and finding flaws is a good way to get you back to reality. Having flaws to point out is also useful for the next step.

Step 6: Start the Negotiation

Whether you’re at a dealership or buying from a private seller, you should always be able to get them to come down on the price at least a little bit. Point out all the flaws before you ever start talking numbers. This will sometimes make the seller feel like they’re asking too much for the vehicle and they’ll be more likely to drop the price.

Always try to get the seller to say a number first. Once you’ve said a number, you can’t really go any lower than that. You always want to see what the seller says first. After they’ve given you a number, offer them an amount considerably lower but don’t lowball them. With all the research you’ve done up to this point, you should be able to pay full asking price and still be getting a good deal. Make sure to let them know you have cash with you and can buy it on the spot. Obviously, you will need to have the money with you if you’re going to say this.

Step 7: Buy the Thing!

At this point, you should be able to come to an agreement. Decide on an amount and pay them the hard-earned cash you’ve saved up. Paying cash is usually going to be the cheapest way to pay. Dealerships will usually charge a percentage of the total price if you want to pay with a card and that could add up to hundreds of dollars. If they don’t have a fee for using your credit card and you have a high enough credit limit, this would be an awesome chance to hit your spend requirement for a rewards credit card!

Congrats, you just paid for your car in full!

Step 8: Get Insurance

The beauty of paying cash for a car is you don’t have to get full coverage insurance on it! If you’ve spent all your saving on the car, then you might want to still get full coverage. Once you’ve got an emergency fund saved up, you can drop the full coverage and smile as your insurance bill instantly gets cut in half.

You might think I’m crazy for telling you to not get full coverage insurance. Sure, it will hurt if your car gets totaled. Much like investing in the stock market is a risk, having liability-only insurance is a risk I’m comfortable taking. I’ve got an emergency fund of nearly $10,000 due to not having any debt payments and saving money on my car insurance bill and I could easily buy a dependable car with that if mine were to be totaled.

So that’s it. Once you’ve got your tag and insurance you’re ready to enjoy that paid for vehicle! If you’re a more mechanically inclined person, you can check out this article and possible drive for free!

Got any of your own car buying tips? Feel free to drop them in the comments and share this article if it was helpful.