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Michelle Singeltary’s Not Fond of Longer Loans Either
By JLP | May 8, 2006
I wrote the other day about an article I read stating that loans with longer terms are gaining in popularity. I just found this article by Michelle Singeltary at the Washington Post saying basically the same thing I said. In fact, she even nearly compares the same loans I compare (except her long-term loan is a 60 month loan rather than the 77 month loan I wrote about).
Her article goes on to say that according to Bankrate, a person’s car payment should be NO MORE than 12 – 15 percent of their after-tax monthly income. She recommends 10%. I agree with her. However, don’t just focus on the payment when you go to talk to a dealer about a car. NEVER, EVER, NEVER, EVER tell the salesperson what kind of payment you want. Doing so gives them all sorts of opportunities to play with the numbers. Instead, focus on the total amount you are paying for the car and make sure it is a car that you can afford.
Anyway, Michelle always writes with common sense. Good stuff.
Topics: Cars, Credit | 1 Comment »
May 11th, 2006 at 12:44 pm
My wife just paid off the remaining balance on my car loan a couple of weeks ago. The loan was for half the purchase price of the car. It was a four year loan, and we paid it off in under two years. Sure, I would have preferred a nicer car. But driving a car payment-free for years is part of how we save money.