Just thought of this. Is a car payment ok if a person has no other payments? No house, no Cc debt, etc.
I would love to see actual numbers. Say a Chevy Tahoe is $80k+. My gut says the minority buys it paid in full with cash. Yet they’re very common, so how do people pay for them is the question.
I think if me, 50% down. Finance rest over 36 mos “if” interest is reasonable. This still equates to $1300/mo., higher than my mortgage was in 2002.
Yes, a payment is OK, if it makes sense against the context of their complete financial picture.
Even for a person with other debt, like a mortgage, a car payment might make sense, it’s just never that simple when we’re talking about somebody’s overall financial situation and financial plan.
Let’s say a person, a doctor, has a car payment of $875 a month, and they’ve financed it for four years, after putting 20% down on the new car.
Is that bad?
Now, what if that same doctor had an income of over half a million a year, was putting away $100,000 a year in cash, for whatever, and maxing out their investment accounts with an additional $80,000/year.
With all that - would the $875 a month be OK?
Our hypothetical, Dr is doing fine, and having the car payment might allow them to preserve the cash for some other, higher purpose…it just depends on the rest of the context.
because, if our hypothetical $875 a month car payment was being made by somebody who was making $40,000 a year, had no cash in the bank, had no investment portfolio, and didn’t own their own home, I would say they were making a colossal mistake.
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