Along with credit cards, automobile debt is an area that gets a lot of people into financial trouble.
Most people never figure out that one of the most money-making parts of the car dealership organization is in the financing from the motor vehicles they sell. Incredibly, sometimes the dealership can even make more from the financing than from the sale from the vehicle itself!
And want to guess who pays for all this extra income for the dealership?
You do! And you spend considerably more for this financing than you would from many other sorts of credit. You are probably paying interest on not only the purchase of the vehicle but also the insurance, the warranty and just about any other additional items that the dealer talked you into buying at the point of sale. This makes for a very expensive automobile and they know it many people find themselves having difficulty just making the monthly payments.
If this applies to you, you may be asking yourself what the best way is to get out of this fix.
You need to think about what alternatives you have to reduce your automotive debt. Unfortunately the biggest thing you can do to reduce those payments is to sell the car! You may have to drive something a little more realistic considering the situation you’re in, both in the cost of the car and the cost of the upkeep and insurance.
Cars are very typically an emotional purchase, where the impression that your new automobile may have on friends, family and neighbors may influence your decision into purchasing a more costly vehicle by borrowing more. But if you are having trouble making the payment, you are just kidding yourself. Why are you trying to project an image that is false? You need to come back to reality before you get buried any deeper.
Sadly, many people are “upside down” in their cars. This means that they owe more on the car than it is worth. Some people have even gone back to the dealership and traded in an upside down car on another one, and now they are not only paying for the new car, but the balance owing on the old car!
Dealerships thrive on foolish behavior like this. They will do everything they can to make you feel important and pump up your emotions about purchasing a car. Their number one objective is to get you to test drive the car, so you’ll be hooked before you know it!
You need to realize that this is not only costing you the car payment each month, but it is costing you the ability to invest in your future. Perhaps you could earn more if you went for additional schooling, but you can’t afford it because of the car payment. Maybe you stumble upon an opportunity to buy a house at a great price, but you can’t afford to because of the car payment.
If you look at the background of people who quietly get rich over the years they have one thing in common. They drive older cars! They have resisted the urge to invest any more of their money than they absolutely have to in cars or anything else that loses value over time. Instead, they invest their money into buying a house, stocks or other investments that tend to increase in value over time.
There is one positive note here, though. The cars being made today are way better than they were say 30 years ago. If you get rid of your expensive car, you can find a really reliable, economical car that still looks pretty nice for not a lot of money. You may find that, especially if you can get into a used car for cash an have no monthly payment, the money you are saving will make you feel better than having that new car!
