Making payments on a car is considered a poor financial decision because it involves borrowing money to purchase an asset that rapidly loses value. A car typically depreciates 15%–25% in its first year and continues losing value afterward. This means that monthly payments are made on something that declines in worth daily, often leaving the borrower owing more than the car is worth for several years. Additionally, financing a car ties up future income in long-term debt, reducing financial flexibility and the ability to invest or save for wealth-building purposes. Monthly car payments add up substantially over time—for example, paying $400 per month for 5–7 years totals thousands of dollars spent on a depreciating asset. Beyond loan payments, owning a financed car also incurs higher insurance costs, registration fees, taxes, and maintenance expenses, further draining finances. Interest on car loans means that money spent is lost instead of being invested for growth. This situation can trap people in a cycle of continuous car payments, preventing financial progress. Smart alternatives include buying used cars that have already depreciated, paying cash instead of financing, and maintaining vehicles long- term to avoid repeated borrowing and depreciation losses. This approach offers financial freedom and peace of mind by fully owning the vehicle, avoiding debt, and redirecting funds toward investments and savings that build wealth over time. In summary, making payments on a car trades future financial freedom for short-term convenience, accumulating debt on a rapidly depreciating asset, increasing costs, and limiting opportunities for long-term wealth accumulation.
