Car loan ‘teaser rate’ makes no sense

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Dear Terry,
Is there such a loan for cars where the payment increases over the loan period? Right now, the job I have won’t allow me to pay a normal car loan payment. However, I’m studying to be a certified nursing assistant, so eventually I’ll make more money and will be able to afford a higher payment.

The reason I’m asking is I have 373,000 miles on my present car with bad tires, bad rear axle, bad rear-axle bearing, transmission slippage and so on. It would cost more than my 1994 Jeep Cherokee is worth to repair it.


Dear Rocky,
As far as I am aware, there is no loan comparable to what you’re talking about, which is akin to the “teaser-rate” adjustable-rate home mortgages that have resulted in the current subprime housing mess.

The reason is that cars depreciate in value, whereas houses generally appreciate. So it would make little sense to offer or take out a loan that would result in the balance staying stable or growing as the value of the car dropped.

Here are this week’s reader questions:
Small-car bargains disappearing fast
Do ‘teaser rate’ car loans exist?
Am I paying too much interest?
Can I get a refund if the motor fails?

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