I’m in the market for a better car. I know you tell people to buy used cars, but I saw an ad the other day for zero-interest auto loans. What do you think about these?
- Cindy
Dear Cindy,
I feel the same way about zero percent interest car loans as I do about every other kind of car loan. They stink!
A car is the largest item we buy that goes down in value. If you crunch the numbers, you’ll see that a new car loses 60 percent of its value in the first four years. That means a $28,000 vehicle will become an $11,000 vehicle while you’re still making payments on the thing! You might as well throw $100 out the window every week. You may not be charged interest on your loan, but you’re still losing money. Do you really think they care about you winning? They’ll get theirs one way or the other!
Zero percent loans tempt lots of folks to buy cars they shouldn’t buy. Pay cash for your cars, Cindy. Stick with good, used cars that are about three or four years old, after someone else has taken the butt-kicking in depreciation.
And NEVER buy a brand new car unless you have a net worth of $1 million or more!
- Dave