Here’s How We Leveraged $9,000 to Eliminate $20,000 in Debt
You may be thinking, what are you talking about? You can’t eliminate $20,000 of debt with $9,000; the math doesn’t add up. But sometimes, there is a way to leverage your assets and eliminate more debt than you can pay off. I’ll tell you how we are eliminating this debt and how you may be able to do the same!
The debt my husband and I are eliminating this month is a $20,000 car loan. We wanted to pay off this car as soon as possible, but we only had $9,000 set aside to put towards this debt. We considered paying the loan down to 11k, but that would still leave us with the debt, and this option would not eliminate monthly payments for good.
Here’s How We Did It:
So, instead, we decided to sell our car with a $20,000 loan on it and opted to buy a cheap but reliable car for $9000.
Essentially, this allowed us to eliminate a $20,000 debt and own a car in full, so we’d no longer need to make monthly payments or pay interest on a car loan.
Since the car we sold had a loan, we knew it would be more difficult to sell the vehicle. After doing some research, we decided to sell the car to AutoNation. We got a quick quote online that offered us just about $20,000. While this may not be the top dollar we could have gotten for the car if we sold it privately, the fact that Autonation would pay off our lender directly and allow us to quickly clear the debt made it a simple choice for us.
If You are Looking to Sell a Car that Currently Has a Loan; Here are Some Great Resources:
The above resources are great places to start if you want a quick and straightforward way to sell your car. These resources are especially great if you still have a loan on the vehicle, as selling privately can be a little more challenging.
Before you accept an offer, you should check the current value of your car through Kelley Blue Book.
You can get your car value in a matter of minutes. This will allow you to ensure you are being paid a reasonable and fair price for your car.
Where Did We Purchase Our Used Car?
When it came to buying our used but new to us car, we decided to purchase it through Facebook Marketplace.
We had looked at a few cars at various dealerships and found that we would end up paying hundreds in dealer fees, and many of the vehicles were priced we’ll beyond their Kelley Blue Book value. Because of this, we turned to Facebook Marketplace to purchase a car. Keep in mind, however purchasing from a private seller does come with risk.
Because we wanted a car that would last we did research before buying to determine which cars are known to stand the the test of time. We were looking for something reasonably priced, but also that had a reputation for outlasting its competitors. After researching a few different models, we knew which types of cars/SUVs we were looking for.
We found a car on Facebook Market Place that matched our criteria just a few days after beginning our search. After looking up the Kelley Blue Book value of the vehicle, we negotiated the price down closer to the car’s value and to meet our budget. We also checked the CarFax report before purchasing the vehicle, and my husband did a quick check for any major issues when he saw the car in person.
If you are buying a car from a private seller such as on Facebook Marketplace, it’s essential to do your due diligence. If possible, Id recommend having a mechanic look at the car before purchasing it. Another option, would be to find a reputable car dealership with low or no dealer fees.
Once my husband looked at the car and saw everything appeared to be in working order, we purchased the vehicle. The previous owner gave us the title and a bill of sale.
The Outcome: Debt Eliminated
By selling our more expensive car and purchasing a cheaper car in cash, we were able to eliminate a monthly payment of $360 and reduce our insurance costs by about $60. This means we are saving over $400 a month and no longer have a $20,000 debt hanging over our heads. What a relief!
Even if you don’t have cash to buy a car outright, you can still eliminate debt using the above method.
Here’s What You Can Do if You Don’t Have The Funds to Buy a Car in Cash:
Even if you don’t have the funds to buy a car in cash you could still do a similar process to eliminate debt if you have a more expensive car than necessary. For example, if you have a $20,000 car loan and are able to sell your car for at least $20,000, you could eliminate that debt entirely and then take out a small loan for a car that is $10,000 or less. This means you could potentially eliminate 10k+ in debt just by trading in your car.
Not only will it save you thousands in interest to have a smaller loan amount, it will also allow you to pay off the car quicker. Additionally, a smaller loan means smaller monthly payments, which will free up extra cash every month.
If you are ready to pay off your debts, check out this article for some more helpful tips!
