I saw an article recently in The Wall Street Journal saying that it is becoming hard to find car loans that don’t charge interest. 0% offers are drying up. It’s something we’ve grown accustomed to for the last eight or ten years, but things change and we have to adapt.
You know, it used to be common to pay 5% or 8% on a car loan. Then, for a long time, we’ve had to pay almost nothing. Interest rates like 0%, or 0.9%, or 1.9%, weren’t that hard to find, but they are becoming rare again.
It’s a normal part of a strengthening economy, so in a way it’s good news. It is going to change the way we frame some of the decisions that we make.
It made a lot of sense to put no money down on a car when the car dealer is giving you the money for free. (If the loan interest rate is at or below the rate of inflation, that is cheap or free money.) Now if it goes back above the cost of inflation, that’s something to consider and you might want to change your calculus a little bit.
Maybe you’ll put more down, maybe you’ll buy it outright, or maybe you make your cars last longer, but the times, they are a changing.
Mike Garry, Yardley Wealth Management. We are a fiduciary, fee-only financial planning, and wealth management firm in Newtown, Pennsylvania. That’s in Bucks County. If you’d like to talk about this or anything else, please reach out: 267-573-1019, [email protected] or @michaeljgarry