I was driving home from the gym this morning and heard an advertisement on the radio for a brand new way of financing a brand new car. One of our new car dealers launched what they called their flex pay program. According to their program, you get to choose your down payment and choose how much payment you can afford.
When I heard this I just wanted to scream. Don’t people learn. This pick-a-payment crap didn’t work when people were giving mortgages to anyone and everyone who had a pulse. People will naturally pick the lowest payment and never pay their houses or cars off. The interest will grow more than the car is worth. I understand that people want to buy new cars, but the average loan is already 74 months long. This will only perpetuate loans longer for an item that goes down in value. I personally think buying new cars aren’t a financial move in general, but this kind of financing program makes my blood boil.
When are we going to learn? These programs of low down payments where you never pay the loan off or it takes five bazillion years to do so are just plain stupid. These types of programs should be banned. There is nothing wrong with buying a car, as long as it is one that you can afford and pay off the loan in a reasonable amount of time (not 74 months) and certainly not this type of program where you may never pay off the loan.
Am I wrong in this? What do you think?