*** ### Paying off car loans - You should put **20%** down. - You should be able to pay off your car in **3** years or less. - Your car monthly payment (*loan interest*, insurance & maintenance) should not be more than **8%** of your income. > [!WARNING] > If you buy a luxury car, you should pay it off in 1 year. > > Monthly Investments > Car Payments ### Depreciation of new cars A car is a [[Investment Assets vs Use Assets | use asset]], It actually **loses 10% in the first month** that you own it. You should know that half of that first year depreciation actually occurs in the first few weeks you drive it off the lot. ![[depreciation-new-cars.png]] **All new cars depreciate**, It's just a function of who's going to pay the depreciation. Are you the consumer that going to be the one that pays that first couple years of depreciation, or are **you going to try to pick up that car that might be three, four, five years old.** > [!HINT] > The sort of ideal time to buy a used car is some time between year 3 and 6. *** **References**: - [Important Car Buying Ground Rules That EVERYONE Needs to Follow!](https://www.youtube.com/watch?v=omuYV59s40E) - [Stop paying off debt if you want to be rich](https://www.youtube.com/watch?v=nPTSOQFT3gk&t=263s)