You’ll get no lectures from me on buying new cars instead of used ones or for financing the purchase instead of paying cash. I have owned cars since I was 16 and have bought them every which way – new, used, with cash and via loans and leases.
One rule I have is that a car loan should never be financed for longer than five years. My strategy for new cars is this: Finance over five years, but pay off the loan in two or three years. The latest data on car payments from J.D. Power suggests I’m out of sync with what the majority of car buyers are doing. Last month, 56 per cent of people financing a vehicle chose a term of 84 months or longer.
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