The Car Truth

Car loans are sneaky bad debt disguised as necessity. Yes, you might need a car. But a $600/month payment on a new SUV isn't a need — it's a lifestyle choice financed with bad debt.

The sweet spot: buy a reliable 2-3 year old used car and let someone else absorb the steepest depreciation. If you must finance, keep the term to 48 months or less and the payment under 10% of take-home pay. Better yet, save up and pay cash. The wealthiest people often drive ordinary cars — because the real cost of auto debt isn't the monthly payment. It's the opportunity cost of money that could have been growing in investments.