Quote:
Originally Posted by BrianZ
Come on Matt, a guy with your financial savvy knows that mortgage interest is tax deductable. 
The house could definitely fall into the area of "good debt". The car definitely falls into the area of "bad debt", just like credit cards. |
I think it depends on the loan terms and the person's overall financial position on whether or not a car loan should be considered "bad debt" or just simply "debt".
Someone who chooses a 84 month term at something like, I don't know, 10% or higher, certainly has crossed the line into the "bad debt" arena.
But take someone who just doesn't have the means to save 40,000 cash while investing nearly 20% for retirement and paying their mortgage. Would financing that car, especially at 36 or 48 month terms at 3%, be considered bad debt? How is that even in the same neighborhood as a credit card with an APR of 15%+?
I see the argument that it's not "good debt" when compared to a mortgage. I just can't agree that paying cash for a car is better than financing, unless you're pulling 40k out of a 3 million dollar retirement account or inheritance.
Even if I personally had 40k in my bank account right now, I still would've only put 20k down and financed the rest over 36 months.
EDIT: This sounds like I'm getting a little defensive....please don't take it that way. Perhaps I'm just jealous I'm not wealthy enough to write the check some of you were able to.