Why You Should Avoid car loans longer than 60 months?

Car loans longer than 60 months, while offering lower monthly payments, can be disadvantageous for several reasons:

Why do you want to avoid getting a car loan for more than 60 months?

And buying any car at a loan length of longer than 60 months is financially irresponsible. Most vehicles will have more problems after year 5, and have a value lower than the remaining length of the loan term than you can imagine.

Is 60 months too long for a car loan?

Experts recommend that borrowers take out a shorter loan. For an optimal interest rate, a loan term of fewer than 60 months is a better way to go.

Is it bad to have a longer car loan?

The longer you finance your vehicle, the more value it loses. This can lead to negative equity. Negative equity – Sometimes referred to as being “upside down” on a vehicle, negative equity happens when more is owed on a vehicle than its worth.

Is it bad to get an 84 month car loan?

84-month loans are not categorically ``bad,'' but they increase total cost and negative-equity risk. Use them only with clear trade-offs: adequate down payment, low rate, and a plan to mitigate depreciation or shorten the loan later.

How To Way To PAY OFF Your Car Loan in HALF the Time!

What is the 8% rule when buying a car?

The 20/3/8 rule is a guideline that suggests you put 20% down on a car and repay the loan over three years. Applying the rule correctly will also require your monthly payment and car expenses be 8% or less of your income.

Why Dave Ramsey says not to finance a car?

“Cars, trucks, RVs, boats, and everything that has motors and wheels go down in value,” Ramsey wrote recently. “NEVER finance them, because they go down in value and you get stuck in them. Don't let debt trap you in something that's losing value every day. Save up, pay cash, and own it outright.”

What is the 20 4 10 rule for buying a car?

The 20/4/10 car buying rule is a guideline for affordable vehicle purchases: put 20% down, finance for 4 years (48 months) or less, and keep all monthly transportation costs (payment, insurance, gas, maintenance) under 10% of your gross monthly income. This framework helps prevent overspending, reduces risk of being "upside down" on the loan, and keeps overall vehicle expenses manageable relative to your earnings.
 

Is it better to lease or buy a car?

Often requires a larger down payment. Typically requires less upfront, and sometimes none. If you plan to keep a car for many years, buying often makes better financial sense in the long run. However, leasing can be attractive if you value new technology, lower monthly costs, and frequent vehicle upgrades.

What is the 50 30 20 rule for car payments?

The 50/30/20 rule is a budgeting guideline where you allocate 50% of your after-tax income to Needs (housing, groceries, essential transport including car payment/insurance), 30% to Wants (dining out, hobbies), and 20% to Savings & Debt (emergency fund, retirement, extra debt payments). For a car, this means your car payment, insurance, gas, and maintenance fit within the 50% Needs category, with experts often suggesting total car expenses stay under 15-20% of your income to leave room for other essentials and goals. 

Is 84 months longer than 7 years?

But if we break it down in terms of time, specifically months, we find ourselves with a simple yet fascinating conversion: 84 months is equivalent to exactly seven years.

What's the smartest way to pay for a car?

The best way to pay for a car balances affordability and cost, often meaning a mix of significant cash (down payment) and a small, short-term loan (e.g., 3-5 years) to build credit without excessive interest. Paying all cash avoids interest but can be a huge upfront cost, while paying all cash at a dealer might cost more than if you financed. Leasing offers lower monthly payments but you don't own the car. 

Is it bad to finance a car for 48 months?

Alongside the advantages of long term loans, there are a few drawbacks to keep in mind. Long loans have more time for interest to accrue, and they tend to have higher interest rates overall. The longer term means your vehicle will likely depreciate before you pay it off, and you might have to pay more than it's worth.

What is the rule of 72 on a car loan?

The Basics

To figure out how long it will take to double your money, take the fixed annual interest rate and divide that number into 72. Let's say your interest rate is 8%. 72 ∕ 8 = 9, so it will take about 9 years to double your money.

What is Dave Ramsey's rule on cars?

Dave Ramsey's core car rules emphasize paying cash, buying used, and limiting total vehicle value to half your annual income, avoiding new cars unless you're a millionaire due to rapid depreciation. He stresses buying reliable, older used cars, getting them inspected by a mechanic, and never taking on debt for depreciating assets like cars, trucks, or RVs, focusing on financial freedom over looking wealthy. 

How much should I spend on a car if I make $200,000?

With a $200,000 income, you can likely afford a higher-end vehicle, but financial experts suggest keeping total monthly car costs (payment, insurance, gas, maintenance) under 15-20% of your after-tax income, or roughly $2,500-$3,300/month, allowing for a purchase price of $50k-$100k+ depending on down payment, loan terms, and other expenses, but a conservative approach might cap total vehicles at half your income ($100k). 

How much is a car payment on $30 000 for 60 months?

A $30,000 car loan for 60 months typically results in monthly payments ranging from about $500 to $600+, heavily depending on your interest rate (APR) and any down payment; for example, at 5% interest, it's around $566/month, while 7% could be closer to $600+, but lower rates or a larger down payment decrease this cost, say Edmunds, Calculator.net, and Honor Credit Union. 

Is it better to buy new or used with a loan?

It may be easier to secure a loan for a new car than it is for a used car, and new car loans often come with lower interest rates. Used cars can be a good fit if you're on a budget and they generally cost less to insure; however, interest rates for used car loans are often higher than for new car loans.

How much car can I afford if I make $4,000 a month?

Some believe that, all combined, automotive expenses, including gas, insurance, car payments and maintenance, should not exceed 20% of your pretax monthly income. Other experts say that a vehicle that costs less than half of your annual take-home pay may be affordable.

Is a 10% downpayment good?

Key Takeaways. Putting down at least 20% on a house is the wisest move—it keeps you from paying private mortgage insurance (PMI) and saves you thousands in interest over time. If you're a first-time home buyer, a 5–10% down payment is okay—but be ready for a higher monthly payment with PMI tacked on.

What not to tell the dealer when buying a car?

"I Don't Know What My Credit Score Is"

No matter if you know your score or not, buyers with low credit scores will be offered higher interest loan rates than buyers with good credit. If you rely on the dealer to tell you what you qualify for, you may get a higher interest rate than your credit score merits.

What is the most financially smart way to buy a car?

How to make a financially savvy car purchase

• Choose wisely. Choose the make and model based on what you need. ...
• Set a budget. ...
• Make a big down payment. ...
• Look for sales. ...
• Shop around for the best loan. ...
• Cut down on interest. ...
• Make a deal. ...
• Keep saving.

Is Dave Ramsey a Trump supporter?

He has blamed politics for what he considers Americans' economic dependence, and has said presidents should do "as little as possible" about the economy. Ramsey supported Donald Trump in the 2024 United States presidential election.

Why did Chris Hogan leave Dave Ramsey?

Departure from Ramsey Solutions

"I'm sorry for the harm that this has caused." Hogan had admitted to having several affairs, including one with a fellow Ramsey employee, during his divorce proceedings with some discipline from the leadership.