A few days ago, I shared how my minivan developed a giant crack in the bumper, which I suspect might have been Greg’s fault. Rather than keeping up with the latest trends and stressing over appearances, we decided to patch it up with some good old duct tape. Despite not criticizing anyone who finances cars, I received a comment that I found a bit defensive:
“Cars are for enjoyment. You can’t think it’s not okay to buy a car that you enjoy and drive every day of your life. You can’t take money with you when you die. Stop belittling people who buy things they want if they can afford it. I manage my $450 payment just fine, thank you very much.”
It seemed like a bit of an overreaction. But hey, I get it. Some people are really passionate about their cars. Still, I stand by my opinion: car payments just aren’t a great idea. Here’s why:
Why Car Payments Aren’t Ideal
Even if you have a great income and can technically afford it, having a large monthly car payment is rarely the best financial choice. Here’s why:
1. Car Payments Let You Buy What You Can’t Really Afford
The primary problem with car payments is that they allow people to buy things they can’t truly afford, stretching payments over several years just to make it seem manageable. I can speak from experience here. In my early twenties, I bought a brand-new Mitsubishi Galant for nearly $25,000. Could I afford it? Absolutely not. At the time, I was working at a group home for $8 an hour. Looking back, it was a terrible decision, but I justified it with the monthly payment.
2. You’ll Never Own Anything
One of the big misconceptions about car payments is that they somehow help you “own” your car. Sure, you may get a good interest rate and plan to invest your savings elsewhere, but most people don’t stick to that plan. I’ve seen countless friends pay off their car loans, only to trade the car in for a new one, getting back into more debt. It creates a never-ending cycle of car payments that becomes normalized, even when it’s clearly not the best financial move.
3. Cars Depreciate Quickly
When you drive off the lot with a shiny new car, it starts losing value almost immediately. The $500 monthly payments might not feel so bad at first, but think about it: in five years, the car could be worth a fraction of what you paid for it. You’ve essentially committed to a huge monthly payment for an asset that’s constantly losing value. The idea of paying interest for something that depreciates so quickly doesn’t sit well with me.
4. There Are Better Ways to Spend Your Money
I’ve never been a fan of paying bills, and I’d much rather put my money to use in ways that benefit my financial future. By avoiding a car payment, I’m saving anywhere from $300 to $500 a month. That’s money I can use for things like:
- Investing in index funds
- Saving for my kids’ education
- Building my writing business
- Hosting events for my community
- Or simply enjoying more experiences with my family
Honestly, there are so many better ways to spend that money than committing it to a car payment.
The Bottom Line
I’m not here to shame anyone who’s comfortable with their car payments, but for me, it’s just not worth it. I’d much rather drive an older, reliable car and save that monthly payment for things that will contribute to my long-term financial well-being. If and when I need a new car, I’ll pay in cash for a used one. In the end, it’s all about being mindful of where your money is going and making decisions that align with your financial goals.
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