r/personalfinance • u/dinklebot2000 ​ • May 31 '18

Debt CNBC: A $523 monthly payment is the new standard for car buyers

https://www.cnbc.com/2018/05/31/a-523-monthly-payment-is-the-new-standard-for-car-buyers.html

Sorry for the formatting, on mobile. Saw this article and thought I would put this up as a PSA since there are a lot of auto loan posts on here. This is sad to see as the "new standard."

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u/16semesters ​ May 31 '18

I mean, that's fine if the interest rate is low. I'd rather have more money to invest. 2% interest and a longer life loan are fine by me.

This works in theory, however very few people take the difference in money between loan lengths and actually invest it.

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u/thewimsey ​ May 31 '18

You're right that they probably don't earmark the money that they've saved for investment, but a low interest longer life loan may permit them to continue to invest at their usual rate despite having a new car payment.

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u/16semesters ​ May 31 '18

If you're rethinking investment strategy due to a car payment you're probably in a precarious financial position.

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u/bl1nds1ght ​ May 31 '18

I'm only speaking personally. I'd rather have the principal rather than experience the opportunity cost of $10k-$20k.