The Worst Kind Of Debt

The Worst Kind Of Debt

Offers from Today's Sponsors

Listen to more from Ramsey Network

Ramsey Solutions Privacy Policy:

Products:

[uyoungthis]

The worst type of debt, payday loans. Who, in their right mind, would ever signup willingly to a loan with over 500% APR is beyond me.

[pauldeck]

When I started my career I had about $10, 000 in student loans, no savings, and I owned one unreliable junker car after another. Then, I got my first real job. I had a piece of paper offering me a reasonable salary! With that piece of paper I was able to go to the Toyota dealer and get a dealer loan at around 6% APR to buy a Corolla Station Wagon. I paid off the loan in three years and drove the car for 15. Transportation was one key thing that I just didn't have to worry about. It was one of the best decisions of my life.

[alcasino]

To each their own. My brand new Honda was driven for 12years 458, 000km before an accident. Payment was completed in the first 4years. The remaining 8years was bliss. Because i was the very first owner, i used it and maintained it the way i wanted.

People financing a Benz, BMW etc are those that need this advice

[JohnLee-tbnh]

I don’t buy cars for value. I buy it for transportation.

[fernijen]

I understand logically what you are saying, but I had a $1000 in savings and was a victim of a hit and skip. Insurance totaled my car, gave me another $800, then a rental for 7 days. I had 7 days to find a new car or lose my job. The cheapest car I was finding that was reliable enough for a 40 min commute was 6 grand. With the current used car market, loans can be a necessary evil if you don't have the savings.

[Geaxuce]

With the experience I've gained from doing brake renovations, the most important reaearch anyone can make when looking at cars, new or used (especially used), is if parts exist for your car when they inevitably need to be changed out

[franklinbrooks]

What you’re failing to consider is that a car is not, nor has it ever been an investment. EVERYTHING you buy…food, clothing, shelter (rent, anyway), appliances, loses value. My last new vehicle, 2020, was purchased on a 0% financing plan and I consider it an excellent value to have reliable transportation which turned to equity in only three years. But, that was never the point. The payment buys me transportation I can trust and very much enjoy.

[aaronramey]

My value is found in not being stuck on the side of the road or in the garage, fixing something on it every weekend.

[tsideas]

The next time Dave buys a brand new Ford Raptor (with cash, of course), you should film him buying it, the cost at the dealership, and then drive it to a different dealership and get a trade-in quote for it to show the depreciation of just a couple miles. I'd like to see it.

[lathamarea]

The owner of a high end car dealership told me...never buy a new car, let someone else take the instant depreciation loss..Best deal is on a " used" three year old vehicle..

[pc]

I didn't buy my car to re-sell it. It's used as transportation. It will last at least 10 years, if not more.

[mario-bnn]

Three life changing tips:

1. Taking action immediately.
2. Reading The architect of riches by Alexander Pierce.
3. Learning how to think for success.

[cjhoward]

You know, sometimes life happens.
I got injured to the point of not being able to work and we lost half of our family’s income. We were saving, we had no debt except a mortgage. And after a year we decided to sell our home so we didn’t go completely broke, and fast forward 10 years, we do have a small loan on a used car. It couldn’t be helped. Don’t be so quick to judge that everyone that has a car loan is bad with money.

[ethanvink]

It makes sense for people who don’t have cash and NEED a car to commute. Most people need to commute to work, and they need a reliable form of transportation to do so. Buying a clunker for $500 will cost a lot in the long run in repairs and days missed from work because it broke down, so most people option for something a little more reliable if they know they will be able to pay it off. The problem isn’t taking out a car loan, the problem is what car loan is taken.

[nanaobx]

My retired husband just bought a brand new Titan. He's owned very few new vehicles in his 72 years. He did buy a new Titan in 2008 when the economy crashed. He got an incredible deal and drove that truck 312, 000 miles in 16 years. He took great care of it, and it served him well. He put half down on the 2024, and the rest is 0% interest. He will have it paid off early. Though this truck cost way more than the 2008 Titan, we are and will enjoy the heck out of it. We will pull a cute 20ft Geo pro Rockwood camper with it we just got for our 50th wedding anniversary and see some of the sights we've always longed to see.

[cscorona]

The problem I have with this argument against auto loans, is that the vehicle depreciates the same no matter how it’s paid for (whether you pay cash, or whether it’s financed through a loan). You take just as big of a hit if you pay cash.

Whether the financing is better than the opportunity cost of paying cash is different problem.

[dannyslob]

Bought my used car 6 years ago with 70k miles on it, currently has 185k miles on it, and the market value is only $1000 less than what I bought it for in 2018. The used car market is ridiculous right now.

[LTDANMAN]

i bought new in 2019 paid 14.3k for my elantra. 4 years later i sold it to carmax for 13.5k. i got to drive a new car for 4 years, total cost was 800 bucks.

[wbaiey]

Deliberately financed 2011 Toyota Camry to boost my credit score from 530 to 800. It did not matter to pay a little interest. It was worth it in my case. presently (0) debt on personal side. I'm loving it. Thanks everyone.

[formerevolutionist]

A car is not just a possession, but a way of getting around and doing stuff. It gives you more opportunities and options, which can be worth a lot.