|
There are lot of variables to this. It really depends on your assets and other debts. If you already have a number of outstanding debts (credit cards, personal loans, mortgage on a house you have little equity on, etc) and few assets to cover those debts if you were to get injured, lose your job, be forced to take a pay cut, etc then financing a $25K+ vehicle over 4-7 years is probably foolish.
If you have assets/money to cover your debts for an extended period of time should you lose you job, get injured, take a paycut, etc then taking out a low interest loan for 24-48 months is not a bad thing if you invest the money and make more than 3-5% or so on your return.
The problem is that many Americans don't invest the money vs paying cash for things. They go out and buy more things (like boats, motorcycles, electronics, trips, etc).
There is no such thing as a sure thing on the stock market anymore (the market can turn overnigh, see 2006). And, unfortunately, real estate is no longer a sure thing either (as many people in the US have seen their home values plummet 10-50%+ not that long ago). In 2002-2006 I watched a lot of people (co-workers, friends, family, neighbors, etc) take out loans and second mortgages on their homes to buy boats, cars, electronics, etc because "money was cheap" and homes were great investments.. Well fast forward to late 2006-2009 and many of those people lost their house, other assets, declared bankruptcy, etc.
So yeah, lots of other factors. Getting a low interest loan on a vehicle is not a bad thing if you have the means to absorb the unexpected and pay the vehicle off quickly at any time. I personally never get a loan over 48 months, and I almost always payoff a vehicle within 12-24 months. I also never have more than one auto loan out at a time (we are a two car family and will eventually be a three car).
|