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This just *really* bothers me. I have many people in my middle-upper middle class neighborhood that are selling good vehicles for $4500 with as little as 150k miles. I would take one of those rather than take out a 7 or 8 year loan.
[url=http://www.npr.org/2015/03/19/393642148/more-americans-opt-for-risky-long-term-car-loans?utm_source=facebook.com&utm_medium=social&ut m_campaign=npr&utm_term=nprnews&utm_content=201503 19]More Americans Opt For Risky Long-Term Car Loans : NPR[/url]
it bothers you that these people are more financially savvy than you are? i would take a 100 year car loan if it had a low enough interest rate. why do you care that people are selling good vehicles for 4,500? if thats what you want, then you should be thrilled that these people are selling them.
Last edited by CaptainNJ; 03-19-2015 at 12:10 PM..
The unfortunate truth is that the financially savvy will benefit from longer duration loans at low interest rates, whereas the financially illiterate will suffer because these loans allow them to live above their means even more.
it brothers you that these people are more financially savvy than you are?
CaptainNJ, you've always had issues with me, I'm not surprised by your first sentence.
So I'm not financially savvy... hmm.... let me see... saving 50% of our income allows us to:
Pay cash for cars and drive them until repairs cost more than the value (has only happened once)
Max out 401k and Roth
Contribute to taxable account and 529s
Pay off the mortgage before I'm 40.
So you really think "all these" people have got something that I don't...
Yes, you're right.... it's called debt.
How long does the average consumer keep their car? Is it really going to last them 8 years? Many of these $4,500 cars I see online are about 7-9 years old. It seems to be the time that many look to upgrade or start anew before their car has given up the ghost. How many people pay off their 8 year old car just to turn around and buy a new one? In my mind it's as good as leasing: it's never really yours, you're just "borrowing" the car .. and perhaps a lifestyle...
My point (and it's in the article somewhere), is that the average consumer could do better by putting what they pay in interest into something like a retirement account. The car depreciates in value. Investments, historically, have not. Assuming that the average consumer is the average American they're not going to be in the same position as I will be in 30 years. They're not where I am today. They could get much further along with they were like me and were receptive of a cheaper or older vehicle, perhaps one without a loan.
CaptainNJ, you've always had issues with me, I'm not surprised by your first sentence.
So I'm not financially savvy... hmm.... let me see... saving 50% of our income allows us to:
Pay cash for cars and drive them until repairs cost more than the value (has only happened once)
Max out 401k and Roth
Contribute to taxable account and 529s
Pay off the mortgage before I'm 40.
So you really think "all these" people have got something that I don't...
Yes, you're right.... it's called debt.
How long does the average consumer keep their car? Is it really going to last them 8 years? Many of these $4,500 cars I see online are about 7-9 years old. It seems to be the time that many look to upgrade or start anew before their car has given up the ghost. How many people pay off their 8 year old car just to turn around and buy a new one? In my mind it's as good as leasing: it's never really yours, you're just "borrowing" the car .. and perhaps a lifestyle...
My point (and it's in the article somewhere), is that the average consumer could do better by putting what they pay in interest into something like a retirement account. The car depreciates in value. Investments, historically, have not. Assuming that the average consumer is the average American they're not going to be in the same position as I will be in 30 years. They're not where I am today. They could get much further along with they were like me and were receptive of a cheaper or older vehicle, perhaps one without a loan.
we have spoken before? your name looks familiar but i dont recall our history.
your "financially savvy" list is about half full of bad financial moves. paying off low interest debt isnt a financially savvy move, maximizing wealth is.
ok, a lot of people dont keep their car 7+ years. what is your point?
oh, here comes a point. no, they couldnt do better by putting what they pay in interest into a retirement account. you need to learn more about this stuff before you start preaching about whats better for people.
This just *really* bothers me. I have many people in my middle-upper middle class neighborhood that are selling good vehicles for $4500 with as little as 150k miles. I would take one of those rather than take out a 7 or 8 year loan.
we have spoken before? your name looks familiar but i dont recall our history.
your "financially savvy" list is about half full of bad financial moves. paying off low interest debt isnt a financially savvy move, maximizing wealth is.
ok, a lot of people dont keep their car 7+ years. what is your point?
oh, here comes a point. no, they couldnt do better by putting what they pay in interest into a retirement account. you need to learn more about this stuff before you start preaching about whats better for people.
Yes, you got on my case months back.. about a ring or something....
Anyway..
Please explain how accruing debt is better than maximizing wealth by contributing to an investment?
I've done both. My current car is financed for 24 months. Why? Because the interest on the money I had set aside to pay cash for the car exceeds the cost of the loan (financed at <1%), and it was clearly counterproductive to take that money out of the market. I'll drive the car until its ready for the junk yard, as I have for the previous two cars I bought new, both of which lasted more than fifteen years. There's more than one way to skin a cat, so to speak. Do what makes sense to you. Oh, and we live on about 50% of our net family income, too, even with the financed car.
Last edited by randomparent; 03-19-2015 at 01:14 PM..
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