How I paid off my Lexus in 22 months

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This Wifes Life Lexus PayoffI almost feel like I need a quick disclaimer on why someone who is frugal would a) finance a car and b) buy a luxury car like a Lexus. Here’s the story.

Twenty-three months ago I was driving a Volvo XC90 and with was a huge POS. I purchased it from a friend for $8,000 and soon realized there were a plethora of things wrong with it–most notably, the odometer didn’t even work so I didn’t even know how many miles it had! Plus, every time something broke down on it (and this was often) it cost at least $2,000 to repair.

So 22 months ago, my husband and I had our eye on a Toyota 4Runner at a Lexus dealership. I will admit, I had always wanted a Lexus and sort planned this out to look at the used Toyota at the Lexus dealer. We drove the 4Runner and hated it. The car salesman suggested we try a Lexus RX350. We did, and the rest was history.

And as to why? The Lexus was actually $10,000 less than the 4Runner. It is a 2010 and had 70k miles, but, come-on, it’s a Japanese car that will run virtually for 300,000 miles. Because of the high miles and with my trade-in for the POS, I financed $20,000 with a car payment of $405.80. If I would have paid the minimum for the 60 mos. the total would have been $24,348. Overall, the Lexus is a safe, excellent quality car that will last me many more years.

Emotionally, I justified the purchase as a 40 year birthday present to myself and I had just passed a major accreditation in my field of work…time to celebrate. I financed the car because I didn’t want to wipe out my savings account to buy it and I was worried the Volvo would break down and keep costing me money in repairs. I also knew I would pay it off quickly.

How I did it?
1. Paid more than the minimum payment–always.
2. Paid toward the principal balance (although Lexus Financial doesn’t make this easy…I had to mail the payment in)
3. Every penny of my side-hustle went toward paying extra to the car loan
4. Made this part of my debt snowball and got after it. This is done by paying the minimum to other debt then taking as much as possible from my budget to pay extra.
5. Enjoyed watching the balance dwindle.

I’m so happy to have purchased this car. It will last me for years to come. Getting it paid off early and being able to move on to the next debt (my credit card) is one more step closer to becoming debt free, financially independent and retiring early.

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10 thoughts on “How I paid off my Lexus in 22 months

  1. Wow! Way to crush that auto loan–that’s awesome. Your comment about paying toward the principal needs to be discussed more (especially if anyone has tips). I have also found it to be incredibly difficult to pay toward the principal and often have to make several calls each year to have payments reallocated. I started writing notes when I mail in payments. 🙂

    1. Thanks for your comment! Regarding principal payments, I’m sure they do it because they really don’t want us to pay off the loans/debt. They “bank” on laziness. I would love to know what your notes said when you mailed in the payments…LOL.

  2. Nice work. It’s really annoying how lender make it near impossible to make principal payments. I had the same problem with Capital One a few years ago. I could make any payment I wanted to online except for principal payments. Those I had to call a special number for and do an ACH transaction.

  3. I love the Toyota family of cars! I drive my Corey the Corolla and my fiancé is actually cruising around in my dad’s 1996 Lexus sedan that still runs like magic!

    Imagine if you had bought the 4Runner for the lower price tag? You’d be fed up with it by now and would resent the purchase or would want to trade it in for something better. You bought right with your Lexus and I’m sure it will hold its value better and will run for nearly ever!

    Way to pay back in such a timely manner! Great tip about the mail in payments. You’re right, lenders never make it easy for us!

  4. When I read the title to the post my first thought was “Why buy a Lexus???” and then I read your first sentence assuring me you would answer the question.

    While I personally wouldn’t spend $20,000 on a car, I understand where you are coming from. If it is a good car that will last you and you enjoy it, then why not?

    My car price range is under $10,000 and my wife and I recently found a used Nissan Sentra with 70,000 miles for under $6,000. The pros to a car purchase like this is that it is cheap, we paid it off in under 6 months, and it is cheap to fuel and maintain. The cons is that this car is small, it will be hard to grow with this car (as kids start coming), and it earns me no respect outside the Personal Finance community!

    Great blog by the way!

  5. Wow. That’s great. Those 5 steps you outlined on how you paid it off can be applied to any debt. Way to go! Now you can enjoy your Lexus with no headaches about payments

  6. Great job! I’m super impressed. Isn’t is crazy how hard the financial companies make it to do principle reduction payments. They definitely understand the power of interest.

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