Everyone will love to drive luxury cars if given chances, but keep in mind that never buy luxury cars but fall in a big bad auto debt. In our society today, the majority people need cars to go to work, bring their kids to school, and use it as family cars travel to some other places. While most people need cars, the ultimate cost of a car is higher than many people can pay in one lump sum. Therefore, the way people go about it, is to purchase it with car loan and this will turn into bad debt.

General people loan to buy cars before homes and that is adverse. For majority people who live their life in the repeat loop, their first major loan is always a car loan. That’s the loan that 100% guaranteed to do down in value except classic cars, antique cars, and some other cars that have appreciation value. So, when is the time to buy a car but not into bad debt?

• If you use debt or buy a newer car with car loan that have better gas mileage than your old car, you could end up better off financially.
• If you need a car to pick up your business partner from other places.
• If driving save you more than to take public transport to the place you work.
• You have a lot of cash in hand, you love cars and you want to drive it as your hobby.

However, the questions buy a new car or a used car? should come into your mind if you really need a car. Keep the APR or car loan interest rate in your mind when buying a car. It is not how much you can afford every month but it is about the budget you can afford to buy a car. Borrow as less as you can when considering getting a car as a transport for yourself.

In stead of rushing out to borrow a huge loan to buy a Mercedes at $60,000, you should consider to buy a cheaper one at around $30,000 car. In conclusion, to being smart with your money is to differentiate between good debt and bad debt.