Saturday, November 27, 2010
Car loans are a rort
If you can't afford to buy a car outright then the next best option is to see how you can get around using public transport such as buses, trains/subway and push bikes. Car loans are one of the biggest rorts around although not necessarily an evil if you really do need a car.
A friend of mind was telling me how his little brother recently signed for a 7 year, $5,000 car loan @ 15%. His little brother said that the loan was cheap...only $30 a week in repayments. If you check out the image I've attached above, on a weekly payment the car loan will be paid out when he's in his late twenties and he'll end up paying interest amounting to 62% of the original value of the car.
So for around $30/month in repayments, he'll end up paying $3,000 in interest. The car itself will end up costing about $8,000 by the time he finishes paying the loan. Hopefully it'll still be functioning when the loan is paid off. If you can survive without a car, I recommend that you do that. My car has been the bane of my life...it drinks fuel like a dehydrated person in the desert and the associated costs are increasing every year.