The Truth About Paying Interest on Vehicles

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Buy Used Car – Buy Car With Cash

Quit paying interest on an item that is going down in value.  It’s a HUGE sucker bet!!  Cars depreciate so quick you end up owing more than the vehicle is worth most of the time (especially when buying new).  Why do people keep doing it?  Who knows? It’s unreal!  Keep reading…

Solution:  Buy Used and Pay Cash

Most people finance their vehicles 3-5 years.  This is terrible!  Over five years a car depreciates up to 50-60%!  Add in the interest on five years and you got REALLY hosed.

For example, let’s say you buy a vehicle on credit for $10,000.  With interest you end up paying about $11,800 on the car.  Guess what? You paid $11,800 on an item worth about $3,000-$5,000.  The car’s value drops like a rock as soon as it is driven off the lot…after a couple of years?  Pfft.

Finance guru Dave Ramsey is known for saying, “You can’t afford a new car UNLESS you’re a millionaire.”

Ramsey has a point.  Think about it…a millionaire will pay cash for their NEW vehicle, right? IF they even buy new!  Keep reading…


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In the book Millionaire Next Door authors Thomas Stanley and William Danko discovered that only 23.5% of all the millionaires they interviewed ever bought new cars!

If you haven’t read Millionaire Next Door please do yourself a favor and read it.  It is quite revealing and provides solid advice to model…BIG HINT: the majority of millionaires aren’t thinking about blowing extra cash in interest on depreciating transportation.

So, this really is a no-brainer…play the percentages! If 76.5% of the millionaires researched in the book  drive used cars do you think it might be a good idea to do the same?  You’re darn right it is!

Save up cash every month and put it away. Buy a clunker if you have to for your first cash purchase.  Who cares? It is a FREAKIN’ car…it is transportation.  Your vehicle takes you from one place to another.  Drive the car until its last breath.  Then, buy another one with the cash you saved in payments.

Buying new and/or paying interest on a vehicle=bad idea.

FYI: One of the best reviewers and real estate all-stars out there John T. Reed does a great job discussing Millionaire Next Door so check it out.  Mr. Reed is a straight shooter and doesn’t put up with any gruff.  When you have time check out ALL of his site.

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