Jaspreet Singh: 3 Reasons Why I Will Never Finance a Car
Written by
Ashleigh Ray, AI Editor
Edited by
Ashleigh Ray
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When it comes to buying a car, the route you choose to acquire it can significantly impact your financial health.
In a recent video on his YouTube channel, Minority Mindset, Jaspreet Singh, a financial educator and entrepreneur, argues vehemently against one of the most common methods: financing a car.
Why? Because, in his words, “financing a car is one of the worst financial decisions that you can make.”
Let’s dive into the reasons why Jaspreet Singh believes this and what alternatives he suggests.
The Interest Trap
When you finance a car, not only are you paying more than the car’s worth due to interest, but you’re doing so for an asset that depreciates the moment you drive it off the lot.
Singh explained this with a straightforward example, saying, “if you were to finance $42,000 at a 5% interest rate… it’s going to cost you $63,000 over the course of 5 years to pay off this car which is now worth $23,000.”
The numbers are stark, revealing a glaring financial loss that only worsens with higher interest rates.
Depreciation Dilemma
The second reason Singh avoids financing a car ties directly to the asset’s nature: depreciation.
“The problem with your car versus something like a piece of real estate is that you know this car is going to lose value,” said Singh.
He provides a chilling depreciation timeline where a new car worth $50,000 can plummet to around $23,000 in value after just five years. This stark loss in value is inevitable for new cars, making financing an even less attractive option when considering the long-term financial impact.
The Cycle of Payments
Singh describes the continuous cycle of payments many fall into when financing cars. Once you’ve paid off one car, the temptation to upgrade to a newer model often leads to restarting the cycle of financing.
“You now start playing this payments game of always paying money to the car dealership,” added Singh. This endless cycle can prevent financial growth and savings, keeping consumers in a perpetual state of owing money.
So, What’s the Alternative?
Singh is not just about highlighting problems; he also offers solutions.
If you can’t afford to buy a car outright, he suggests considering a used or less expensive car. He emphasizes the importance of buying a car that you can afford with cash to avoid the financial pitfalls of financing.
For Singh, investing money into assets like businesses, real estate, stocks or even cryptocurrencies is a better financial move than pouring money into a depreciating asset like a car.
Singh drives a 2007 Toyota Solara, showing that you don’t need the latest model to be satisfied.
“I have the cash to go out and buy a much nicer car… but to me, I haven’t needed that car yet,” he explained, highlighting the importance of prioritizing financial investments over luxury or status symbols.
The Takeaway
Jaspreet Singh’s stance is clear: financing a car ties you down to a depreciating asset, wastes money on interest and traps you in a cycle of continuous payments.
His advice is to consider the financial implications of your choices and opt for smarter investments that build wealth over time. Whether it’s through buying a car with cash, investing in assets or simply living within your means, the goal is to make financial decisions that support your long-term wealth and happiness.
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
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