Car loans. One of the biggest barriers to investing in RE.

[Mitch Davidson]

Hi friend. I’m sure you’ve heard many tips on how to start investing, how to grow, etc. Below is some advice that you may have not heard. In fact, it’s so unpopular and counterintuitive that a Google search for supportive imagery produces almost nothing to use. Our culture, economy, and media are permeated with the notion that everyone should have a nice, newer car, and that they should use a loan to obtain such.

Get rid of your car loan! And if that means driving an old, unimpressive car, so be it!

Consider this. Using a 6% interest rate for sake of example, the increase in your DTI that a $599/mon car payment makes results in you being able to borrow $100K less on a 30-year fixed mortgage. Likewise, a $1K/mon car loan reduces your loan limit by about $170K.

Also consider the fact that unlike the house you might buy your car is losing value every day, while you pay interest on it.

I know it's hard to consider a lesser car. I've been there and done that. I’ve argued with myself that a nicer car supports my career and relationships, which isn’t really true. Now I couldn't be happier to have much more real estate and wealth because I downsized my car spending.

If you need additional lending advice, or feedback on investing in western North Carolina (WNC) markets like Asheville, I'm happy to help. 

[Nathan Gesner]

One should never borrow money for a depreciating asset.