The worst investment you will ever make will likely be each car you buy, in succession. More than a house, cars are a money pit. They lose value immediately upon purchase, both new and used. You will inevitably be forced to perform repairs on top of regular maintenance work. The maintenance and repair work you do will not add value to your newly purchased asset, like they would to a home. Insurance prices are always rising, plus registration and inspection costs. You might also be subject to taxes on the vehicle. All of this, and I still have not yet mentioned that the price of gasoline is at an all-time high. But most people in the United States either do not have access to public transportation or it is a major inconvenience to use it. Also, having a car gives you immense freedom to roam about at leisure, so most of us own at least one. So; how to pay for the car?

Before I get into paying for the car, make sure you do a few things before buying:
One, get the car history via the VIN number if your car is used.
Two: Buy used. It is less expensive, more practical, and still new to you.
Three: run your existing car into the ground before buying a new one. Until repair costs exceed $2,000, it is generally less expensive to keep your current vehicle.
Lastly, buying a car might be exciting, but the less emotional of an experience you make it the better decisions you will be able to make.

Cold, hard cash
Having cash in the bank to buy a car feels great, but it pales in comparison to the satisfaction of being able to say to a car salesman that you will not only not need financing, but that they will need to lower their price if they want your money.

Cash gives you leverage. Dealers may tell you, "We make more off you by financing." but the truth is that you have money, they will not need to run a credit check, and you are standing in their dealership. If they give you an offer you are unhappy with, you can give them your contact information and walk away. Wait a week and make sure they will not go any lower before reconsidering their bid.

The final benefit: you owe nothing because you have paid for the car in full.

Financing
If you cannot afford to pay the full amount of a vehicle, reconsider whether you really need a new car. If you still do, pay as much as you can and finance the rest through a third party. The dealer will almost always give you a poor deal from a financing standpoint. Also, if you need to stretch the financing out over more than a three-year period, you are likely exceeding your price range by buying more car than you can reasonably afford. Financing for periods over three years also suggests that you are paying more for the car than it is worth.

Consider multiple sources of financing. Drawing equity out of your home might soundfaily crazy, but mortgage rates are generally less expensive than car loans. If this is not an option, visit online lenders who specialize in car loans such as . Financing through the dealer generally works out in the best interest of the dealer, not you.

Before you accept a loan, find out what the payments are and calculate the present value of the stream of payments. You need to do this because it will tell you how much you are actually paying for the car in today's dollars. For more information on how the time value of money can help (or hinder you), please refer to my entry on how a $2,300 HDTV can cost $1,600, or wikipedia.

Lease
Leasing a car is foolish. You are taking an already poor investment that drains you of money and - after making years of payments - you still own nothing. Leasing with an option to buy mitigates this somewhat, but lease terms are inevitably less favorable than financing through a third party. Avoid leasing at all costs.

Sell your soul
If you have a soul, you might want to consider selling it for a car. While a soul is important, it is of little use to you if you are unable to get from point A to point B. Some individuals lack a soul and would gladly give you the cash equivalent, which should be enough to pay for a car. Consider approaching lawyers, plastic surgeons, and recent convicts that might be interested in replacing their own corrupt soul. You might also consider celebrities, lottery winners, and successful artists who have lost their souls. If you are still unable to come up with money for a car after exhausting your options for paying in cash, financing, leasing, and selling your soul, you might consider selling a family member. You might love them, but it will still feel pretty good dropping them off with their new owner in your new car.

Tips
Payments aside, I found what worked best for me was to find the exact car I wanted from a year when the car was likely coming off its lease. In my case, it was 2001 and I was buying a 1999, since 3-year leases are fairly common. I faxes a description of the car I wanted - manual transmission, make, model, year, etc. - to every dealership in a 30 mile radius. I received a number of responses, picked through a couple, and got a good deal from a dealer about an hour south of my city. I highly recommend this method.

The last tip I'll give you is to peruse the following site for more helpful information:
Car Buying Tips