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how to pay for your car

Oct 30, 2025
Explore the various methods to pay for a car, including cash, loans, and utilizing mortgage equity. Discover why a 20% deposit is crucial and how keeping repayments under 1% of your income can prevent overspending. Glen James shares practical loan rules and debunks the allure of 0% deals on pricier vehicles. He emphasizes the importance of short loan terms and highlights the differences between mortgage splits and car loans. Finally, learn why paying cash might suit you better in some scenarios.
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ADVICE

Concrete Loan Guardrails

  • Do aim for a 20% deposit, keep loan terms under four years, and avoid balloon payments unless business needs justify them.
  • Keep combined car repayments below 1% of your gross monthly income to avoid overborrowing.
INSIGHT

Capital Beats Interest In Impact

  • Interest rate matters but is usually secondary to the capital you borrow and total repayments.
  • Buying too expensive a car and spreading it over longer terms is the real financial risk, not small rate differences.
ADVICE

Say No To Seven-Year Terms

  • Do prefer shorter loan terms (around four years) and avoid dealer upsells that extend terms to seven years.
  • Reject longer terms that lower monthly payments but increase total cost and encourage overspending.
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