Hehehe. I financed my last car for seven years but paid more on the low payments to pay it off in 4. The 7 years gave me a little cushion just in case my cash flow slowed so that was strategic.

@Lodeenie

4 жыл бұрын

That's what I'm going to do on my Kia. 6 year loan but I'm gonna pay it off in 5.

@gigijerrie322

3 жыл бұрын

Smart...... : )

@traxiii

3 жыл бұрын

That's great and all, but you pay a higher interest rate when you finance for longer terms. You mitigate some of that by paying it off early. I assume for you, having that flexibility to make the lower payment if necessary, gives you some piece of mind you are willing to pay a little premium (interest) for.

@adrienchan2097

3 жыл бұрын

I agree w you.

@CitizenPerkins

3 жыл бұрын

@@traxiii -- Especially for people with seasonal work/jobs (like tradesmen). I'm thinking of all those "pipeline" workers just put out of work by the new prez...

My best way to get rid of negative equity is the keep your present car until it is paid off.

@thomassgm

3 жыл бұрын

Nope. Read my original comment. Not a good plan. Enjoy life vs. being strapped to an old car you hate. Learn to work the system to your favor, it can be done. After all, they are working you and they are going to make a profit so, don’t feel bad. I never walk out of a deal being taken advantage of. I’m up front about that with them and make sure that they get paid for their work but they aren’t going to get rich off of my one deal. As such, they get repeat business and I drive vehicles that I enjoy for 2-3 years and turn them in. We make it fair. Please don’t mistake my comment as abrasive, I did not intend that way.

@antoniobalsamo4046

3 жыл бұрын

@@thomassgm That doesn't explain how to get rid of negative equity.

@thomassgm

3 жыл бұрын

That requires a deeper lesson on money and finances. Negative equity is a state of mind or being. I understand what you are saying but that thinking isn’t going to get a person out of the problem that they are in. I have literally tons of negative equity but it is working for me. I hold notes, sell them, the list goes on but I never pass up free money rates of 0-4% when I’m cranking out 80-150% leveraged returns. I borrow everything I can get. That still doesn’t answer your issue, I get it. That is a longer discussion and a complete transformation in thinking. Much easier than one might think.

@lindap.p.1337

2 жыл бұрын

NEVER trade in a car you owe on. You just put off paying THE MAN and it will cost you so much more. You want to buy a new car when you still owe on it? You are STILL paying for your TRADE IN for the entire length of the new loan. Don't be money stupid!

@thomashaas5965

2 жыл бұрын

@@thomassgm that sounds like a lot of work. I just enjoy my paid-for Toyota Camry. Never was and never will be the most exciting set of wheels but they're reliable wheels and its mine. All mine. I owe nobody anything. The peace of mind is worth the loss of theoretical investment gains. I'm okay with that. My goal in life is to never be hurting for money and my progress is so far so good in accomplishing that goal.

19 years ago, I leased my Acura MDX for 3 years because I couldn't afford it. Then I bought and financed it fo 5 years after the lease term. I still drive the car because I really liked it. So I've been payment-free for 11 years. So my reasoning was buy the car you really want and keep it as long as you can. So you don't have to keep trading and accruing negative equity.

@alpappalardi7044

4 жыл бұрын

It’s the best approach. I leased two 50g Cadillacs that were NYS LEMONS. Luckily I got my money back. And it was their car. Lease it, if you like it, buy it. Negotiate the price up front

@jduran111

4 жыл бұрын

They always said leasing and then buying is the most expensive way to buy. However, they are assuming you would get rid off it in 5 years. How about if you want to keep it for more than 10 years, does it make sense then?

@alpappalardi7044

4 жыл бұрын

Jose Duran actually not always true. Always negotiate the purchase price of the vehicle whether you lease or buy. The residuals are estimated to what they think the car’s value will be at the end of the term. Plus if you had no problems .its a consideration. If if was a problematic car. Unload it.

@edwardvargasperez3545

3 жыл бұрын

Hmmm, I might try this. I keep my cars for long time cause the ones I buy I really like them.

@Cornuts1000

2 жыл бұрын

Good job. Borrower is slave to the lender. Buy what you can afford. Not what you want.

Ha! My neighbor purchased a $94k Navigator. He didn't like it so he went to the dealer a week later with 200 miles and they offered to buy it back for $72k.

I took a 72 month 0% loan on my $60k GMC truck, paid it off in 3 years. I like the low payment in case tragedy strikes and I lose my job or something. If that happened, I'll take the low payment and probably keep the truck till I ran it into the ground. But, I understand the view for people that can only afford the minimum payment. You are totally right with negative equity. I never let it get that way.

@joeblow9657

Жыл бұрын

This is the way

@RGI18

Жыл бұрын

0% was last offered in 2011-12 from dealerships which loan company gave you the loan ?

@joeblow9657

Жыл бұрын

@@RGI18 Ram trucks still offer 0% iirc

@polishedturdspeedshop

Жыл бұрын

@@RGI18 I have 0% on my 2020 Ram. It is still baked into the price, there is no free interest

@blessedbethecurse

Жыл бұрын

...why would you pay it off early if you're not getting charged any interest? *ESPECIALLY* if you're going to keep the truck. You could take that extra money you used to pay off the truck and just set it aside and invest it. That way you're earning money on it rather than giving it for free to a bank who's not even asking for it yet.

I love how ray puts everything in simple terms that everbody can understand. Thanks for doing what u guys doing. God bless!!!

I keep my trucks at least 10 years. I'm on my second truck in my 35 years I've been alive. I'd rather have a nice bank account than a new truck, phone, tv, ex....

@S5King7

4 жыл бұрын

You are very disciplined. I get an itch for something new and different and buy cars before I really need to. For me it's a combination of liking new tech and a bit of flexing something new.

@jrchevy2500

4 жыл бұрын

@@S5King7 yeah I get it. It feels great to get the new things, and if anyone can afford it I'm all about it. It's just me personally I love not having payments.

@dino11216

4 жыл бұрын

If you had a lot of money we wouldn't be having this discussion. But I'm sure your getting there.

@S5King7

4 жыл бұрын

@@dino11216 Not necessarily true. I worked with an SVP that made around half million a year and his pride and joy was telling people that he drove a 15 yr old Explorer. I think he just wanted to prove to us how superficial we were.

@dino11216

4 жыл бұрын

@@S5King7 we all have heard this story or similar, but that's not my point. My point is that you can definitely have a nice bank account and drive a new car!

Just found your channel and absolutely love it!!! Mr. Ray is so philosophically smart, but talks in the most basic way!

Great addvice!!! A relative of mine wound up taking her Honda CRV in for an oil change. She had the car she bought used in and still had 4 years left on the 5 year loan. The dealer spoke to her in the showroom while she was waiting, told her he needed used CRV's and sold her a new car. She now has 72 months, rolled over 7000 because she was upside down, misled her where she thought she was getting 21000 trade in , they gave her 14,000, added the 7000 shortage to the new loan and now after is all said and done after having to keep the new CRV for 72 months will have paid a total of 47,000 for the new one. Sometimes there are sales people who take advantage of people who may be a little slow. Thank you so much for making this video. If people would do the math instead of being so excited to get a new car, big mistakes like this could be avoided.

Hello, I just found your channel and am really glad I did. You both are so open and honest, very refreshing and appreciate your both candor and being so honest and truthful! Thank you very much!

If you're paying 0% you're negative equity doesn't matter. Either you've been paying that balance off monthly or you pay it off when you trade in the vehicle. Now if you have to roll it into the next loan that has interest that's a problem. But the problem wasn't the payment schedule it's that you couldn't afford the vehicle to begin with. My argument for why you would want a 0% loan for 8 years is two parts. 1) lowering the monthly payments frees up money to pay down higher interest debt or invest, and 2) with inflation the value of the dollar amount of the loan goes down every year. So even though you pay the same amount your first month and last month. That last month is actually cheaper.

@martingriggs6362

4 жыл бұрын

Richard I agree completely. The value of $100 dollars in 2012 is now in 2020 - $112.42 adjusted for inflation. The average selling price of a new car in 2012 was around $33,000. In 2020 money that's around $37,000, or the average selling price of a new car today. 0% or close to 0% percent loans make a great deal of sense no matter the term. Inflation is going to get much worse in the future when the deflation is over from the stimulus. If you are planning to buy a car in the near future, do it in the next 1 to 2 years. Make sure it's a car you can live with for 10+ years, cause you are going to want to keep it.

@cfoofgaming6950

4 жыл бұрын

This is the difference between understanding finance vs specific industry analysis. TVM is rarely taken into account with a lot of the analysis I see.

@joeychitwood6004

4 жыл бұрын

Exactly! @Richard!

@TheDogDad

2 жыл бұрын

Yeah Ray didn't make sense here

@robertt9825

2 жыл бұрын

@@TheDogDad It's pretty straightforward. The length of the loan is proportional to the depreciation curve of the vehicle. Longer the loan, the less you're paying principle (actually paying for the car) and if you wish to sell or trade in at a later date within the length of that loan you will be in a negative equity position and/or paying much more for the car than normal financing terms. It's just bad math and a silly "0% promotional" period that gets people making an obvious mathematical mistake.

Love the channel. I lost 2 cars to theft several weeks ago. These were 20 year old cars that were taken care of meticulously. So I’m in the market for a new car. Your channel has been a god send. Thanks!

@TheOzthewiz

4 жыл бұрын

You must live in a "nice" neighborhood!

Hey Ray you started the same war Star Wars came out. Like the content. I grew up without a dad to teach me about money, your son is very fortunate to have you to teach him.

Thanks guys. I will now be better informed/educated when I purchase or lease my next vehicle. I too have been riding the negative equity wave but no more thanks to you.

Great info on rolling negative into a lease payment. Awesome stuff!

Thanks Ray for keeping it real!

Ray!!! You just answered my question that I keep asking myself! This confirms what I been thinking!!! You’re the best

@CarEdge

4 жыл бұрын

Happy to help!

Thank you guys for sharing this info. It will save people a lot of money. Going forward including myself

OMG RAY! Thank you! I've never heard that advice on calculating the length of the term on how long you intend to keep the car. I always thought of just the amount of the monthlies. I personally want to keep a car forever, but I understand those who don't. This helped ease my mind!

Great points made in this video! As mentioned by others here, you have to watch out for the interest rate on longer term loans. It's nice to have some flexibility in the payment, for example if you can afford a $400/month payment but would rather have a $350/month minimum payment "just in case." But you are likely going to finance at a higher interest rate to get that lower minimum payment. And if you only pay the minimum each month, it will be a long time before you can break even on a trade. When you can afford to, pay the $400/month. You'll pay down the principal faster, save money on interest charges over time, and hopefully be able to trade or sell that car sooner if you wish. Financing negative equity from your trade-in won't just cost you more in the higher payment on the amount financed, but the finance rate itself. Banks are more likely to charge a higher interest rate when you're rolling negative equity into your new car loan, because there's a higher risk there. Also, with enough negative equity, you might not even qualify for a loan, or at least not one with a rational finance rate. Even with GAP insurance, if you total your new car very soon after buying it, you might still owe the negative equity you financed going into your current loan. Check the terms and conditions of your coverage for this, and consider buying additional coverage if necessary. Also, if you did get GAP coverage, it can be smart to cancel it at some point in the life of your loan, like when the car is finally worth more than you owe on it. Before you say I'm being too high and mighty, let me admit I've made mistakes buying and trading cars over the years. Thankfully I'm better educated now. That doesn't mean I won't make mistakes again, but at least they'll be well-informed mistakes!

Great edification on this industry!! THANK YOU!!! BOUGHT NEW 4 YRS AGO. GOT CONNED INTO SELLING THAT VEHICLE TO ANOTHER DEALER AFTER 2 YEARS OF PAYING ON IT. THE GOT ROOKED INTO BUYING ANOTHER NEW VEHICLE ONE YEAR NEWER THAN THE ONE I SOLD TO 2ND DEALER! NOW CURRENT VEHICLE VALUE AT $9300 BUT CURRENT DEBT TOTALS 19000.00! WISH I KNEW THEN WHAT I HAVE LEARNED IN LAST 2 YEARS BY EXPERIENCE PLUS YOUR VALUABLE INFORMATIVE VIDEOS. THANKS AGAIN. KEEP MAKING YOUR VIDEOS!!!

Grateful to learn how to best address the purchase of vehicle! Finding all your videos very informative! Take Care

Watched tons of your videos and this was the most raw. Thank you for discussing vanity!

Excellent info regarding the dangers of negative equity and then using a lease to pay it off and get even.

Funny story about 100k being a "want". I had a salesman begging me to come in and test drive a new Toyota that I wanted very badly and I refused to even go test drive it. The sales manager asked me why I wouldn't come in. I told them "a car is an impulse buy and I'm just not feeling it anymore, thank you for your time".

I guess im keeping my pick up for another 12 yrs minimum. Good video.

This is amazing teaching lessons.

This is the most philosophical conversation I've seen you have. Kudos.

Save and pay cash. The psychological impact of having payments changes how you approach each month, quarter or year. Having paid off vehicles changes your viewpoint on: What you spend upfront (if you save and pay cash - it changes how much you spend substantially) and having your vehicle paid off impacts have you look at your finances overall. Much of financial management is emotional.

@tikijojo

4 жыл бұрын

@Liz A Save your money. I know people who make 30k a year and save 5k a year and 10 years later have $75k+ plus in the bank while that money was earning interest. People need to stop buying so much crap, live below their means. Basics and fundamentals.

@dmcars147

4 жыл бұрын

Great advice, I bought exactly two cars with payments and possibly the worst two purchases I made. The psychology of debt is so powerful, both when you have it and when you don't. Avoid it at all costs and watch your mood improve!

@653j521

4 жыл бұрын

@Liz A I'm reading a book from 1929, using the Middletown study as reference for economic changes in the 1920s. The author mentions that almost every house in Middletown had a car and a radio and other new devices by 1925 but the houses of the working poor, as we would call them today, had few basic amenities because the owners were up to their ears in debt with time payments to have these expensive toys like everyone else while they had none of the things that were far more important. A hundred years later and the tune is the same. (The book was written just before the crash with an introduction from just after it. Of course those people who thought they could always make their payments because they would always be employed were suddenly in trouble, just like today. They actually owned very little and what they didn't own was taken.) By the way, I have a nice car that I bought used last year for a lot less than what you quoted, a roomy 2011 with awd which I had wanted for years because of winter with our hills, and no rust, that runs very well. I wanted it but I waited for it. Interesting concept, I know. You don't need to spend that much for a decent used car. I'll bet a lot of people could tell you the good deals they got for much less than that, too. Don't be an average American. Be a smarter than average American. :)

@edgarraygoza5824

2 жыл бұрын

@@tikijojo your money is losing value sitting in a bank.That’s a shit idea the interest doesn’t even cover inflation.

@BettleBeet

2 жыл бұрын

First part like I did like but the end made sense.

I really loved this....first time viewer turned follower ☺️☺️☺️☺️

Appreciate all your videos. Been in my 2000 Nissan Xterra since December 1999 absolutely love her. She's got 238k miles on her but know I need another shortly instead of pumping fees for upkeep, but I plan on my next vehicle to last me another 10+ years, so I'll certainty take the extended loan to keep payments lower. My thoughts are, like anything, get lower payments you can afford and be disciplined to provide extra when you can to pay out off sooner. Thanks for all your info.

Thank you. Your knowledge is gold👍

Ray, you are describing an economic law called diminishing marginal utility. You are spot on when describing "the psychological need" to buy something new. This economic law says that after we purchase something new, the utility (satisfaction) we get from it diminishes over time and people seek to replace or buy something new. Using the cell phone analogy was a perfect example as well. Great job.

@fortheloveofnoise9298

Жыл бұрын

I can't even afford a Yugo...

I drive a 2010 car and I plan on sticking with this for my entire life. It's all paid off and have been for a while now. I like having no car payments. You guys can be fancy and buy cars all you want. I'll be happy saving my money to buy a house.

@commonsenseoverall7627

4 жыл бұрын

do both! Just make more money haha

@taraaboland

4 жыл бұрын

jason s thanks tips

@TheIwearsox21

4 жыл бұрын

You’re going to have a 2010 in the year 2060???

@sportsMike87

2 жыл бұрын

To each their own. Life is short

@thomashaas5965

2 жыл бұрын

@@TheIwearsox21 that'll be a 50 year old car then. That's like driving a 1971 nowadays. That's not uncommon to see. Cars can last that long. Especially Toyota's - cars that don't die. I plan to keep my 2014 Camry for 30 years honestly. I'm 30 now. Realistic given that Camry's go 300k+ miles, mine currently has 89k and I only have a 5 mile commute. I can rent cars when I'm gonna take long trips. I'll buy me a nice new SUV or truck at 60 though because why not.

Zach, your pop is the man.

I like the idea of financing the car for as long as you want to keep it. That’s a good point!

I actually enjoy working with a professional car salesman. I walked into a dealer years ago and was looking a beautiful black truck that was sitting in the middle of the showroom floor. It was a busy Saturday morning and there was many people in there. A loud voice rang from across the room and he literally said "let's take it for a ride" and literally threw me the keys from 40 feet away. The doors to the showroom opened up and I drove away with the vehicle I wanted. I bought three vehicles from that guy... unfortunately he passed away. Haven't found another real salesman since. Most of the salesmen today suck. They have to read the munrony to tell me about the vehicle. Come in man!

@jrchevy2500

4 жыл бұрын

I pretty much piss off most car salesmen and every sales manager I deal with.

I would really enjoy hearing/learning about sales tactics.

I’d love to hear the comparison between old school sales and the new school of thought.

Thank you! The old guy really opened my eyes. With the “Needs & Wants” thing. I watch every day and learn a lot. I’m looking to finance a car soon because I “Need to”

I’m a huge fan of long term, low or zero interest loans. I always budget it so that I could pay it off in half to 2/3rds the time and then I have a cushion if I lose my job or fall on hard times because the payment is relatively low vs. a 36-60 month loan. I’ve done this a few times and always paid almost twice the payment so that by the time I traded or sold the car I was fine as far as equity. Sure took a hit as we all do but totally reasonable ones. The plan is to have a payment that I can manage if I lose my good paying job and have to take a less paying gig.

@ryanbrown8757

2 жыл бұрын

Same here that's exactly my logic behind it.

@BettleBeet

2 жыл бұрын

How do you get low 0% 1% interest rates

@halvorson566

2 жыл бұрын

@@BettleBeet certain sales/incentives for auto loans. Then some credit cards will have 0% for XX months

@ig3134

Жыл бұрын

THISSS!!!!!!! This is how you manage money and financing so many think car financing is a straight point a to b thing and it is isn't. This is how you make the financing work for you and not throw all your money away.

@Skoora

Жыл бұрын

@@BettleBeet unfortunately, today probably not possible with current rates. Was more doable a few years back.

The amount of cars I seen repossessed this month its crazy

@GateHacker1

4 жыл бұрын

What do they do with those vehicles?

@yungactivist

4 жыл бұрын

@@GateHacker1 they probably sale it if the owner doesn't want to pay his missing payments then after that I'm guessing they'll either auction it or resale it.

@TheOzthewiz

4 жыл бұрын

@@GateHacker1 They go to auction.

@wlonsdale1

4 жыл бұрын

@@TheOzthewiz then the previous owner is on the hook for the remainder anyway

I always do 72 months for low payments then pay the loan off after 3 years

@xxBLKSNXxx

2 жыл бұрын

Yup. Nothing wrong with this at all. Your getting the cheaper payment without risking having to afford hundreds more potentially per month and pay it off when you want

This is sage advise. Much needed in today’s society.

Your dad is awesome. Very old school type guy just like my dad

The og talking great game and knowledge👍

Finance a car no way ever! Zero percent finance offers nail you with higher purchase price. It is not free money. You are paying thousands more for the purchase. People all you have to do is set aside money each month to replace your car and then pay cash for it. I am looking to buy a slightly used Lexus RX 350( a car coming off lease, someone else take depreciation butt kicking) for 30K all in, I will drive for 10 years and it will cost me $250 a month over that time plus maintenance ( little with dependable Lexus) which will put me way ahead of folks that lease through that time for $500 plus per month for a comparable car. Yes they get a new car to drive every 2 to 3 years but I will retire early and already a millionaire and those folks will be wondering when they can retire if at all and those cars they had to have will be long gone. If Americans would only buy what they could afford the average citizens would be far richer. The car payment is the payday lender of the middle class don’t fall for it. All you do is make banks and dealerships rich.Don’t you want to be rich instead?

@b4cats1

4 жыл бұрын

That mindset will keep you poor. Most folks if they choose can save $250 a month for a newer car if they choose to not spend money on other things like eating out all the time, alcohol, coffee, expensive cable, cell phones, etc. I want people to win with money and if you follow the masses you will lose.

@wlonsdale1

4 жыл бұрын

@Liz A don't buy a 30000 car. Clearly you can't afford it if you can't buy it cash.

I like Ray. You have a great dad, Zach!

@CarEdge

4 жыл бұрын

I like Zach, personally I think I have a great son, but I am certain that I am prejudiced.

@Ravaniscool

3 жыл бұрын

@@CarEdge I wish I could've had the same relationship as you guys but some things are not meant to be and we have to go with the flow. I found your channel accidentally and really enjoy all the content, it makes me feel better about everything. My best wishes are always with you! Thank you!

cash- well you SHOULD if you Could...MOST People CANT!! Yeah that kind of sums up the masses buying cars.....Love Your Channel!!!!

@tinmanslickgreasy999

4 жыл бұрын

More people need to buy a car they can afford....and keep it!

@RKmndo

4 жыл бұрын

Finance used and economical at low interest. Invest the cash.

@wlonsdale1

4 жыл бұрын

@carnage6ar don't buy a new car and stop buying the newest iPhone

I had a 72 month no interest. Never Again! No incentive to pay it off because the "damage" has been done! No interest means you relinquished some discount on the purchase.

Your Brother is smart. Buy a car and drive it till the wheels fall off.

@joejones5653

4 жыл бұрын

I think it is his dad

Financing for at least 72 months to create a little breathing room each month and still get your "vanity" vehicle is ok, as long as you dedicate an extra dollar amount each month towards the principle balance and end up paying less than the determined 72 month term. You can have it both ways.

@certifiedmg3437

4 жыл бұрын

or always do the home buying philosophy in putting 20% down

@danieltsuedo334

4 жыл бұрын

truth.., co worker of mine.. would finance 72 months.., always paid it off in about 3 years., drive it a while longer.., then “sell” the, to his nieces and nephews, when they got ready to drive. always, toyota avalons. good guy.

@reklovjj

4 жыл бұрын

Financed my leased GTI in 72 months was able to pay it off in 13 months. Today this car still has good to great value and only costs insurance...

@wlonsdale1

4 жыл бұрын

Most people will go for 72 month even if they think they'll do less

Take the free money and pay it off early. Easier said than done, I know. But use a financial calculator and figure the payment for 4 or 5 years at the going interest rate and pay that amount to the finance company. In most states, there is no penalty for early payments.

Good day Gentlemen, my last car which I still own & drive is a 1995 Mercedes wagon. A mothers day gift from my children. It hasx 194K, then I took it to the mechanic to be checked for fluids and oil change. They saud they were working on the car & put an additional 3000 miles on my wagon ! I found a reputable mechanic, above the same age as your son. He's great, honest and had my car co posted with extra parts for less than 300$ As he repaired the A/C and the steering wheels, along with a new muffler . Dud I do good ? Thank you, for your great advice ! As a subscriber to your channel. 🌟🌟🌟🌟🌟

I love the comment about GAP. I’ve done that many times (even during a hurricane) and no luck! Lmao

Great video and insight on the car buying process. Can you make a video in regards to the specifics of leasing. Thanks in advance!!

@CarEdge

4 жыл бұрын

Great suggestion! Yes, we'll definitely cover that in a coming video or two. We may need a whole series on leasing! Thanks for watching and suggesting.

@mrg3284

4 жыл бұрын

@@CarEdge appreciate your speedy response.. Thanks again!!

Glad they mentioned keeping the car. I have owned my car for 15 years and it’s still runs like the day I drove it off the lot. Learn to take care of your cars folks. Learn basic maintenance.

You had me at the title lol. I asked for this yesterday and you guys delivered Thank you

@CarEdge

4 жыл бұрын

Hope you enjoyed and found it valuable, Pedro!

@peteroc25

4 жыл бұрын

@@CarEdge Can you give advice on options for people with bad credit that can't get good financing? Besides the obvious of getting your credit repaired lol

@ronriggs9954

4 жыл бұрын

@@peteroc25 yesss!!! Most of us are in this boat!!!

Like a lot of people...finance for 72 and payoff in 48 or so. It takes discipline, but if you lose some income you have a cushion.

But if you are able to buy the new car for 20-25% off sticker then get 0% why not finance for 84months then you aren’t held to the higher 36month payment. You’d eliminate the initial 20% depreciation loss as well. If you can afford to pay the higher 36month payment do it but when times are tough you aren’t held to the higher payment. Most loans don’t have any stipulations you can’t pay off early. Don’t pay cash when 0% is out there. That cash can make you more money in other investments.

@TheOzthewiz

4 жыл бұрын

If you go for the factory 0%, there NO negotiating DOWN from the MSRP. You either get 0% or you negotiate, not both! Also, to get that 0%, your FICO will have to be about 800. The 0% is to get you into the showroom!!

@jeffpalmer9542

4 жыл бұрын

ojars zvaigzne - where have you heard that? I’ve done it 100s of times for multiple friends and family.

@RKmndo

4 жыл бұрын

You can also put enough money down to not be underwater.

@RKmndo

4 жыл бұрын

@@TheOzthewiz 760-780 FICO is enough to get 0%. Negotiate the price before discussing method of payment. If your credit limit is high enough, you could even use a 0% credit card offer for a cheap used car. 18mos at 0% for $5K worth of financing on a used $5K-$10K Fit or Yaris is better than paying all cash...if you're trying to be REALLY economical.

Great video guys, as usual. I was surprised, however, that you didn't cover the topic of taking the longer 0% loan in order to take advantage of the promotion, but then putting extra money into your payment every month in order to avoid becoming 'Batman', hanging upside-down in your car. Seems like the logical option, if you're responsible with your money, and have the where-withall to pad your payments.

You should do a video on buying a used car and the negotiation process involved to get the dealer’s best price!

@TheOzthewiz

4 жыл бұрын

There is a LOT of room to negotiate, since the WHOLESALE PRICE (what dealer paid) has decreased by 12%, whereas the RETAIL price (what you pay) has decreased by only 1%!

Good video. Food for thought. Leasing - interesting idea for getting out of negative equity - I figure the lease payment will be painfully high but hopefully it would teach a lesson. Many years ago I used a low interest home equity loan to pay off a higher interest car loan. After doing that and then thinking more about it I just got mad at myself. Since then, I've just saved up and paid for cars when I bought them (ie cash) and, most of the time, bought used cars that had already taken big value hits from depreciation but were still good cars and could eventually be sold for an amount relatively close to my original purchase price.

@tinmanslickgreasy999

4 жыл бұрын

Buying a good used car with cash...Best way to go!!!!!

I stopped needing advice a long time ago I just like listening to these like podcasts ✌️

Interesting video I know lots of people are upside down in a car. The big advantage to paying off a vehicle before trading is having enough to pay for all the taxes and hopefully some actual down payment on the price of the car. I started with a car I could afford and then traded up every time. I also always would pay extra on my car payment even if it was just $20. It took some time and a few cars but now I get to drive the cars I want! I know we live I an instant gratification society but being patient and a little time will allow you to drive what you want.

The psychology of sales and marketing is an interesting topic, as related to car sales and at large.

Great advice guys. Question... Have you any experience with "swap a lease"

This is a good topic. I love cars but I am also, or try to be, financially responsible. I've had ridiculous car loans and leases when I was young. Now I am older and wiser and have more disposable income I have no car payments and a very fun older car that I love driving. Some people spend money on clothes, travel, and buying frivolous things. I like to have a nice car because it makes me feel good. What can I say?

Keep up the good work guys! Enjoy the rapport between the two of you. Not sure I appreciate the financial logic of taking a shorter loan just to avoid negative equity..obviously negative equity is not a great thing but it seems you are only avoiding it by handing over your money earlier to the dealer...somewhat like ensuring a tax rebate by handing over extra tax throughout the year - forced savings, if you like. Am I missing something?

@landrewmackinnon4888

2 жыл бұрын

I agree.

Future question: How to decide on a long lived, efficient used car for a retiree to keep forever. F-150, Toyota, Honda. How to find a quality USED care without known mechanical problems? For instance, videos on fixing more recent cars are terrifying about the terrible engineering that cost way too much to FIX, such as broken heaters, overhead valve V8's with plastic components that failed, etc. I once had an Infiniti Q45 and a $50 internal engine part broke after warranty and it cost $8000 to rebuild. So we are talking about selecting models and components that are SIMPLE and don't break the bank to maintain.

@ivancedillo8

4 жыл бұрын

Vance Jochim any Ford panther vehicle, Crown Victoria, Mercury Grand Marquis & Lincoln town car.

@musicman8270

4 жыл бұрын

Don't forget the used Lexus option.

@andrew.woolman7449

4 жыл бұрын

Buy a new 2020 Corolla LE and negotiate a huge discount. Maintain it well, change out the transmission fluid every 30k miles, and keep it for 20-25 years.

Thank you for putting my vanity in check what I need and what I want are entirely 2 different things. Like Ray I do not drive that much anymore so spending 30K on a car is next to insane.

I'm in the same boat with Ray's brother. I still own my car and truck that I purchase new in 1999, and 2000. I plan to purchase a used 2020 vehicle in the next couple of months that is 15% to 20% cheaper and still have the warranty and will keep it until it dies.

@onedankind8168

4 жыл бұрын

15-20% cheaper but watch those interest rates. New can cost less because of low interest rates. Just gotta do that math.

Your right Cash is King for sure!

Y’all are growing so fast bro in 4 months

@CarEdge

4 жыл бұрын

It's fun!

@georgiesland7315

4 жыл бұрын

Your Auto Advocate keep the videos coming very very good info

Love you guys sharing wisdom based on 5 decades of experience... thank you!

Another great video guys! Question, what is negotiable when these 0% deals are being offered? Can you still negotiate the car price etc?

@beingrealhere9480

4 жыл бұрын

Car prices are overly priced and inflated even with 0% interest.. The interest is put in the msrp.. Nothing is free

This guy is great!

This is fantastic advise for people who are bad with money. What I mean is, for people that can not save, or are buying a car they can barely afford. Negative equity is not a problem if you are taking the money you would have been paying on a shorter loan term, and saving or maybe even investing it while you make payments on a longer term loan. This of course depends on the interest rates, and in this example it was 0%. I don't think the info in this video is wrong, I think it's optimal for one type of person and not optimal for another.

There is no "always" or "never". I bough a new "demo" with 6K miles on it, big rebate, 0.9% interest, put it on 84 months and put $15K on it. I was in positive equity from almost the beginning. Just make sure you are in positive equity once the warranty is over. Just use an excel calculator, make sure you know how much interest you are paying and everything make sense, if this is allowing you to buy your dream car, like I did, just do it.

I used the above mentioned lease tactic to get rid of my accumulated negative equity from previous bad purchase decisions. I am able to get into a new car under warranty and work through the entirety of my negative equity in 36 months.

What about if you own your vehicle outright and you want to trade in on a 84 month 0% deal??? even though wholesale values are down on used vehicles. Good Video & info, thanks.

Interesting talk. And negative equity is a plague, too many people don't understand this. There are exceptions to the long finance term and for me they are all used, i.e. expensive cars that don't depreciate much if at all, and are reliable / collectors cars / pleasure vehicles, but they are VERY few and far between. Some that I would be OK with financing long term are 997.1 or 997.2 GT3 or GT3RS, 997 Turbo/Turbo S, Audi R8 V10 manual, 2015+ Viper, Corvette ZR1 (C6) - but only low milage examples. This list is short because in this realm repairs are pricey and reliability is key. Buy the right example and you could own it for nothing in a perfect scenario. BUT - tough pill to take advice from someone who buys a Mini j/k :-P (disclaimer: they are horribly overpriced/unreliable vehicles that my wife couldn't wait to get rid of).

Im planning on buying a new replacement truck for towing an RV trailer timing it with the coming buyers market and could pay cash for it; however, im not comfortable of letting go of that much cash at one time heading into a recession. Im thinking of taking advantage of the current cash rebates incentives and pay 50% cash and finance the other 50% at standard apr (4% or so). Is that a good strategy ? what would you do ?

Couple of things on this: 1) A lease is really nothing more than financing with an extended loan amortization and a ballon. The difference for the buyer is the balance owed is guaranteed to be absorbed by the lender at the end at a specified amount. Like a put option on a stock. Doing the math on several deals I have looked at, the lease payments equate to an 8 year loan, with balance due in 24-36 months. 2) If you put money down at purchase the 20% you lose up front is your down payment. 3) If you do a 84 month 0% interest loan on say a $40k purchase price with a car that has a $43.5k MSRP and a 58% residual on a 3 year lease, you reach the residual amount in 31 months. At 36 months your balance is $22,857 for the 0% financing and $25,230 for the lease. The tricky part of the 0% is how less you could have paid for the car if you did regular financing given the incentive. 4) You always have the option to pay more than the minimum on a 0% loan. If you want to pay the loan off in 5 years, divided purchase price by 60 and pay that amount. If something happens job wise or life you have the option to pay the lower amount. Gives you flexibility, but takes a little discipline. 5) If you are a cash buyer or one that can or does puts a lot down and buys a car every few years consider a 1 pay lease. The money factor will be lower than a typical lease, and you have the guarantee of what the balance is (car value) at the end.

It makes sense to take a shorter term loan and pay the car off quick but, people go with longer term because their monthly payments are cheaper and depends on their financials

I agree with the end suggestion but not the reason mentioned. Here's how I think one should make a decision on how long you should take a loan for. Ask your bank how the rate changes with term. Ask them - hey how would the rate change if I take a 6 year loan vs. a 5 year. From my experience, rate spikes up a lot once term goes longer than than 5 years. For that reason, I think 5 year loan is a sweet spot - you are better off having a car loan at low rate rather than having a credit card loan at a much higher rate. Even if you don't have other debts, keep your cash, you never know when you will need cash. Second point: 0% interest is not always no interest. When they give you 0%, it is factored in lower price discounts. E.g. when I was in the market to buy a truck, 0% interest meant no price discounts which meant higher purchase price by around $5k.

Future question if not covered before: It appears most car valueing services like KBB are owned by firms that benefit from artificially high values being set for vehicles. In otherwords, they can claim KBB says the car is worth $12k when it really has a market value much lower if sold at Mannheim or by private parties who have paid off their loans. Are there any truly independent car value guides still left? Recommendations?

Pay extra, pay early and start paying biweekly. Easy ways to keep longer terms from hurting you.

Question which 1 is better please or buying?

Free money is free money. If you have the discipline, take it. 0 APR (or 0.9%) is robbing the bank. If you invest and be decently good, you will have 5-8% annual return. At the very least, you can get a high-yield saving account, which will give you 2.5% on the high years, 1% on the low years. The way to do this though, is to calculate the payment of X years (length of your ownership), and 7 years, and then pay as if it's an X-year loan, except the difference into your investment or saving account. For example, for $50k loan on a car you plan to own for 5 years, at 0 APR, 5-yr monthly payment is $833.33, 7-yr payment is 595.24, and the difference is 238.09. So take a 7-yr loan, and in every month, pay your loan bank $595.24, and deposit $238.09 in your investment or saving account for growth. At 5 year, you may not be upside down (your car may be worth more than 2/7 of the original value afte 5 years), but if you are, you have money in your saving's account ($14285 even if there is no growth) to fill the gap. In this case, you can choose to sell it privately, which takes work, but because you can get the title as you have the money to fill the gap, you get to sell it higher to a private party. Many people have to trade and roll-it-in negative equity because they cannot get the title, so they will be robbed by the dealer in their trade value (15-50% lower than private party). One thing to note though, if you invest, remember this is not the retirement account, rather it is the money you will need in 5 years. So don't go to high-risk investment ideas that could lose the money.

Hey- these videos are a god-send to most people and i really appreciate the disclosures they provide. But, as a general rule, they won't help most people! The reasons are multiple but in a nutshell: MOST people are NOT DISCIPLINED to apply most of the advice given and the dealership WILL break you down to get what they want. Its the game of odds: dealership knows a few of us will be savvy and smart enough to walk away from a bad deal; but they are betting on the "weak" customers with all kinds of emotional/mental/financial/ weakness to exploit.

Sure, your new car depreciates in value soon as you drive it off the lot.. but factor in 1 year later with average miles driven the value will be nearly the same and you've driven it 1 year. Buy within your means. Just like houses.

Wants, needs, vanity, ego, images. Good stuff to think about.

I always take the longest term possible. It allows for more flexibility in case I have a bad month. That payment is a minimum. Just like paying on a credit card, it is stupid to make minimum payments. I never finance anything I cannot pay off in one year even though it may be financed for 60 months.

There is a TON of vanity when buying a car. For some people it is ALL vanity (my son). Yes, it feels good to drive a new car and smell the smell. I love it! But I NEVER overspend and love my Toyotas that last forever! I feel the days of keeping a car two or three years and trading it in are over.

I know someone who had a long loan on a car that needed major repairs and the parts wouldn't be available for weeks. She wanted to get another car that wasn't such a loser, but had this loan for a car that had both depreciated and needed work. She was very unhappy to have to roll over negative equity to escape this albatross. I wish she had known about leasing as a possible option. At least this happened before covid swept in and she had a safe car to pick up her daughter from college.

Would you consider making a video on how to respond to sales tracks from salespeople and F&I people?

In general he is right but this is not always the case. How well a vehicle holds it's value and how many miles you put on it a year can be huge determining factors on rather you should do the 72 or 84 month term.

What is the best way to find out what incentives dealers have on new cars?

Ray always looks good today