New Car Loans Exceed Six Years
Boy, do I love that new car smell! But, not enough to replace my used cars!
Experian reports that in the first half of 2019, 1/3 of auto loans for new cars had terms longer than 6 years. Average car loans have grown to over $32,000 with some terms as long as 8 or 9 years!
People are taking on more risk in what appears to be affordable payments. Yet, many are underwater before driving off the lot – simply by signing papers.
When we take on debt, we assume that we’ll earn enough in the future to repay it. But James, the brother of Christ, warns us against presumption, calling it arrogance. He says:
…you don’t even know what will happen tomorrow. What is your life? You’re a mist that appears for a little while and then vanishes. Instead, you ought to say, “If it is the Lord’s will, we will live and do this or that.” As it is, you boast in your arrogant schemes. All such boasting is evil.
Though the passage doesn’t prohibit debt it gives 2 sure facts: we don’t know the future and God’s will is paramount.
Prudence, not presumption, should guide your debt decisions in 3 ways.
- Borrow only for assets that can appreciate in value or produce an income.
- Don’t owe more against an asset than its liquidation value.
- Don’t let debt payments strain your budget.
I don’t recommend financing new cars at all! Instead, save your money for a dependable used model. And, smell someone else’s new car.
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