I saw an article recently in The Wall Street Journal, saying that we can no longer get car loans that don’t charge interest. 0% offers are drying up – they’re becoming hard to find. It’s something we’ve grown accustomed to for the last eight or ten years. Things change and we have to adapt.
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, but it’s going to change the way we frame some of the decisions that we make. It made a lot of sense to not put money down on a car when they’re 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. So, you might want to change that 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