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IMO car payments are rip off for the most part. I just bought a used car, put 5K on the credit card (just for the cash back), the rest $11.5K (including Tax/title/etc) I wrote a check. The finance guy was quoting a rate of 13% for a 60 month loan on the rest "If I wanted to save my money and finance". I guess that is what happens if you have poor credit.
I know on new cars they advertise low, even 0% loans, but usually there is the cash back option too and in my case, I save ahead and my savings rate never matches the cash back, so I still pay cash. We have never bought a car we couldn't pay cash for, but I am sure it is necessary at times.
Ours are quite manageable. Bought both our Tucson and Sportage new. Tucson is $240 and the Sportage is $305. The Sportage is the higher overall cost as it's newer and has more features. Both have 1.9% and I overpay each month.
Personally, my threshold is about $25k-27k for the price of a vehicle. I might splurge one day and buy a used C6 Corvette and cap that at around $40k for a Z06 model.
13% these days is for someone with extremely poor credit. We have good credit, our cars both have negative equity from trades and are at 2-3%.
Payments are no big deal as long as they fit your budget.
They can be a big deal. As I said before, stretching a loan out to the point that the payments don't keep up with the depreciation is unsustainable in the long run, even if in the short run you can handle the payments.
Of course if you could pay enough to keep up with depreciation but are investing elsewhere, then it may not be so bad. The problem is when people buy too much car and then stretch the loan out to fit their budget.
Payments are relative to income. If you make $150,000 a year, a $1,000 a month car payment isn't that big a deal.
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