Car Payments are NOT OK

Warning: This is a rant about car loans. My sister Jackie has been told her whole life that having a car loan is a normal and acceptable. This video is me telling her it’s not OK to make car payments if you don’t have the money in the bank to pay cash for the car.

UPDATE: Jackie accepted the challenge! Mission accomplished. More to come.

UPDATE 2: Our friend Jim Collins liked this video so much he included it in his own MANIFESTO!! What an honor, thank you Jim. Check it out:
http://jlcollinsnh.com/manifesto

Disclaimer: I don’t mean car payments are never an option. If you have the cash to pay for a car and choose to invest it somewhere else that’s fine.

Here’s a video by Dave Ramsey that explains the “pay yourself car payments” a little more clearly:

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4 thoughts on “Car Payments are NOT OK

  1. Deana

    Dear Mike and Lauren, Love your videos. This latest is one I’m really hoping will trigger good dialog in my family. I would like your thoughts on using other people’s money vs. your own. What I’m referring to is when market forces drive car manufacturers to offer auto loans at zero interest, does this alternative influence your views regarding car payments?

    Reply
    1. Mike And Lauren Post author

      As long as you have cash to pay the car loan off, I’m not completely opposed to payments. The problem is those zero interest loans are usually only available for brand new cars. I’m 100% against brand new cars unless you literally have thousands of dollars to piss down the toilet (initial depreciation). I can’t say that I’ll never buy a brand new car in my life, but I can tell you it’s going to take A LOT more money in the bank to even consider it (probably over a million). Thanks for comment!

      Reply
  2. Tyler

    This video came at a perfect time for me and my wife. On Saturday we stopped by a dealership with a 2010 Honda Odyssey for a great price with super low miles. We took it for a drive and decided to buy it. The dealer offered to arrange the financing for us and when everything was said and done the total was over $13,500. Problem was that was all going to be financed. Through a stroke of luck they had to wait a day to process the loan and during that time we decided we didn’t want a $250 payment. We called the dealer and told him we would not be buying the van. We lost our $40 deposit (that’s all the cash I had on me at the time) but we avoided the debt.

    For the next several days I sifted through hundreds of used vans and last night we finally found the one. The van was in great condition and we paid cash. I have never owned a car outright in my 6 years of marriage and it feels so good to own the car instead of being owned by the payment. We were able to negotiate $500 off the list price and bought the car for well below blue book value.

    Thanks for the awesome videos guys. Mike we are cut from the same cloth.

    Reply

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