New Car Smell(y) (aka Car Debt)

I read an article recently that said that 72-month car loans are becoming the norm instead of 48-months. As someone who hasn’t had a car payment in years who is planning to drive my 2008 until the wheels fall off, I was flabbergasted. 72 months is 6 years! Imagine making payments on a “new” car while dealing with the maintenance issues of an older car. Ouch!

I was curious about what the difference would be on a 48-month car loan and a 72-month car loan.

I was even more curious about the impact that high-interest rates have on those with less than stellar credit.

So, I compared a 48 vs 72 month car loan rates. Check out the calculator below to see the impact that time and interest rates have on a $20,000 car.

On the left is a 48-month car loan rate with an interest rate of 3.6% vs. 15.24%. On the right is the same rate comparison but with a 72-month car loan rate.

Purchasing a car based on monthly payments alone can be deceiving. The 4-year loan with the low-interest rate has a $448 monthly payment and the 6-year loan with the high-interest rate has a $425 monthly payment.

$10,637 of interest on a $20,000 car! In a nutshell, if you have bad credit and a 6 yr loan, at month 72 you just paid for 1.5 cars. So ask yourself, is a 72-month car loan bad? Some with not so good credit should be asking, is a 48-month car loan bad?

In many parts of the U.S. that 10k could have been a 3.5% down payment on a house using a first-time homeowner program. On average, folks in the U.S. are spending $37,782 on new cars compared to the 20k scenario above.

It definitely pays to have a good credit score if you need to borrow money for major purchases.

Utilizing a Financial Coach is like having a personal trainer for your money. Find out if an accountability partner, guide or cheerleader is right for you by scheduling your FREE 30-minute Q&A call.

Mind Your Money in 2020

Utilizing a Financial Coach is like having a personal trainer for your money. Find out if an accountability partner, guide or cheerleader is right for you by scheduling your FREE 30-minute Q&A call.

Feeling Worthy of Money

Just after Christmas and right before January 1st is a reflective time for many people. This year, I remembered a Christmas gift that I received from a friend in 2001. It was a pack of Gold Toe socks. I was extra grateful for those socks because I had NEVER had nice socks before. They felt luxurious and I felt fancy and grownup and not poor. Most importantly I was feeling WORTHY of money.

I didn’t realize until receiving that gift the weight that growing up poor had and continued to have on my life. The socks themselves were not expensive, but I had the habit of not even considering them when I made my sock purchasing decisions. I didn’t even bring myself to look at them on the display. They were probably a better overall value because they lasted longer and I didn’t have to buy socks as often. My poor mindset had me making poor decisions. It took someone else to help me realize that I was on autopilot.

I made a decision right there to never skimp on socks because every little step I take is worthy. My sock upgrade was a gift to myself that kept on giving. Because I was wearing them daily, I had a constant reminder to be conscious and intentional. It didn’t take long before I began examining other ways that I was making financial decisions that may not have been the best. They became especially meaningful as I began diligently focusing on my finances and every penny mattered. I do mean EVERY penny. I found that as I was learning to manage my money that I was also learning how to overcome not feeling worthy of money.

Hardly anyone saw my socks and if they did see them, their “power” was only of value to me. I didn’t need to buy a flashy item or overspend to show off to others so that they would think about me in a better light. Feeling worthy came from how I felt about myself and feeling worthy of success.

Utilizing a Financial Coach is like having a personal trainer for your money. Find out if an accountability partner, guide or cheerleader is right for you by scheduling your FREE 30-minute Q&A call.