Wouldn't it be great if you could use the same principles for saving money that you do when you use balance transfer credit cards with your car loan? Moving the remaining balance from one car to the next ... oh wait a minute, you can do this! With a balance transfer offer though, typically you do it because you're going to get a better interest rate.

When you transfer a remaining car loan from one vehicle to a newly financed vehicle, you are instantly "upside-down" on your car loan. You now owe more money on your car that it will ever be worth, and unless you can make a very large payment to reduce the loan balance very quickly, you will probably always owe more than the vehicle is worth. Sometimes it can be as much as two to three times the value.

This cycle must be stopped before you completely ruin your financial situation. Sure, it makes it possible to get a car loan before you've fully paid off a previous one, but don't let your car become one big liability on your financial statement.

Keep Your Cars Longer

Instead of financing a new car before you've paid off the other car, keep the car longer. Keep it until the wheels fall off and you've fully paid the balance! Another option would be to sell the car for market value to a new owner (not a dealership), and use the money you get from the sale to pay off your loan before financing another vehicle. At any rate, you should pay the first loan off before you consider financing another car loan.

Buy Used Vehicles Instead of New

Instead of financing expensive new cars, consider buying a used vehicle. Buying new results in a huge depreciation when you drive your new car off the dealership lot. Buy a used car, and the depreciation of the value is a much slower process because someone else already took the "big hit" in value when they bought it new!

Drive Cars After You Pay Them Off

Most cars have tens of thousands of miles left in them after you've paid off the car loan. Who says you need to get a new car every three or four years? Plan to drive the car for a few years after it's paid off, and your car will be "paying you back". You'll be payment free - and can set money aside to buy a car with cash - or at least make a hefty down payment on your next car purchase.

Smart Financing

If you can finance a vehicle for four years or less, and keep your car payment at 10% or less of your monthly income - you're looking at a smart finance deal. Just like a home, you should aim for putting 20% of the cost of the vehicle down, to reduce the amount you're financing and keep your monthly payments lower. Look for 0% interest offers on car financing, or low APR for the life of the loan to keep your expenses down.