Have you ever taken out a car loan? I’ve done so once. It was years ago, and for a vehicle that I would be out of my ideal price range today.
This is because, as we get older, we are supposed to get wiser. Not everyone follows this pattern, and I know that I have my blind spots. But when it comes to taking on loans, I think I’ve progressed in my thinking. Unless I need to take on a loan, I would prefer not to. Paying cash for a car sounds ideal, and I say that knowing that the car I buy will be purchased more with needs in mind, instead of wants.
If you are going to take out a loan, I like the idea of trying to make it as short-term as possible. I took out a 3-year loan, and couldn’t wait to get it over with. 36 months of payments, tormenting my bank account 3 dozen times.
What about the notion of a longer-term loan than that? I’m not talking about 4 years, or even 5 years. I’m talking about 8 years! That’s right, there are 96-month car loans available!
Somebody please tell me why anybody needs to take out an 8-year car loan.
If a person really needs a car, why not get one for a modest price? One can get a car that gets the job done, going from Point A to Point B, for a few thousand dollars. Admittedly, I wouldn’t want to do that – but if one’s finances require this, then it can be done. If someone is really tight on cash, maybe it would require a loan to pay for such a car.
But not 8 years.
That’s the point – I can’t see how too many people have to take out loans of that duration. If that type of loan is required, then my guess is that car is too expensive, and you don’t need it. Simple as that.
There are plenty of things that could surprise people in life. Illness, job loss, or any number of things could surprise us and impact our finances. Why purposely put ourselves behind the proverbial 8-ball by taking out unnecessary debt obligations? While debt-free living might not be feasible for everyone, purposely making our lives debt-burdened is something I don’t get.
I wonder what goes through the mind of someone taking on an eight year loan. Probably things such as:
“Oh, I MUST have this car. It’s my DREAM car!”
Or, for the entitled person: “I’m not settling for some average car. I DESERVE a certain standard!”.
Or, for the Big Hat, No Cattle people: “I couldn’t imagine driving some used, no-name car. What would people think? I need to keep up my image”.
Really, at the end of the car loan, the thing will be 8 years old. Now, I’m a fan of embracing car longevity, and driving one a long time. My past experience going past 220,00 miles can attest to that! The only thing is, not all cars drive well for that long. A car 8 years old may not be all that useful at that point, and may not have much residual value.
Maybe there are people that need such a loan. I just can’t come up with a good reason why!
My Questions for You
Do you think the concept of the 96-month car loan is as silly as I think it is?
Have you ever taken on a car loan? If so, how long was the duration?