Quote:
Originally Posted by squiggs96
I agree with you, but what I find weird is what happens when you pay it off. At the beginning there is imputed interest, which usually can be figured out pretty easily. I bought a car in 2005 and financed it at "0% interest" over five years from GMAC through the dealership. When there was a year left on the payments I called GMAC and asked how much they'd accept for me to pay the balance in full. There was about $6,000 left (12 payment of $500), and they said they wanted all $6,000. They said that because it was true 0% financing, there was no interest component, and the principal portion was still $6,000. With a 3% interest rate, the PV of the payments was about $5,900. I was hoping they'd want the money now, and not have to worry about collections. I was also hoping I could get a bit of a deal and maybe settle at $5,750 or so. They wouldn't agree to any discount, so I paid the remaining 12 months off at the regular installments.
Side note, I love how people don't consider mortgage to be debt. It makes me smile each time.
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There is good debt and bad debt. In my opinion.
A mortgage is good debt, if the house you purchase is within your means. If you are house poor, then I would argue that is bad debt.
Cars are bad debt across the board IMO. Everytime I look at our vehicles I see two burning piles of money, just try to keep the pile as small as possible.