Don't Finance a New Car for 72 or 84 months. Here's What You NEED to Know Now. (From a Car Dealer)

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Be sure to like, comment, and subscribe. Ray and Zach discuss how long of a loan term you should take when you finance a car purchase. Should you finance for 60 months? 72? How about 84? Ray provides his advice on how you should approach financing your next car.

[@chrisper94]

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]

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

[@gigijerrie322]

Smart...... : )

[@traxiii]

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]

I agree w you.

[@CitizenPerkins]

@@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...

[@borjeny1]

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]

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]

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]

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]

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

[@Cornuts1000]

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

[@Bill-ck3lo]

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]

This is the way

[@MannyMopar]

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

[@joeblow9657]

@@MannyMopar Ram trucks still offer 0% iirc

[@polishedturdspeedshop]

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

[@blessedbethecurse]

...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.

[@johnh8705]

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.

[@antoniobalsamo4046]

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

[@thomassgm]

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]

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

[@thomassgm]

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]

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]

@@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.

[@jrchevy2500]

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]

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]

@@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]

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

[@S5King7]

@@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]

@@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!

[@bradmaier4804]

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.

[@TheeDevilWearsPrada]

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.

[@JsChannel8]

do both! Just make more money haha

[@taraaboland]

jason s thanks tips

[@TheIwearsox21]

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

[@sportsMike87]

To each their own. Life is short

[@thomashaas5965]

@@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.

[@tomjenike6836]

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]

You must live in a "nice" neighborhood!

[@rmc3375]

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]

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]

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]

Exactly! @Richard!

[@TheDogDad]

Yeah Ray didn't make sense here

[@robertt9825]

@@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.

[@timothycoyne5874]

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!

[@bobbykeaf]

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]

@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]

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]

@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. :)

[@Rakeeem]

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

[@BettleBeet]

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

[@j.w.m.rhynejr9766]

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!!!

[@Skoora]

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]

Same here that's exactly my logic behind it.

[@BettleBeet]

How do you get low 0% 1% interest rates

[@halvorson566]

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

[@ig3134]

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]

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

[@tracywaters8538]

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.

[@blackbelt4139]

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.

[@fortheloveofnoise]

I can't even afford a Yugo...

[@stevenseverson7950]

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

[@pipbernadotte6707]

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".

[@juangilliam5811]

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

[@cityinthesky1341]

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

[@CarEdge]

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

[@Ravaniscool]

@@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!

[@nilsjohansson9739]

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]

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

[@flakocibao]

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

[@MoneyMakerRealty]

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

[@stacking4life86]

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

[@tinmanslickgreasy999]

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

[@RKmndo]

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

[@wlonsdale1]

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

[@janacandia1449]

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.

[@jessshrop4607]

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

[@CarEdge]

Happy to help!

[@DRodMuzicman]

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”

[@MarkM58]

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.

[@jeffpalmer9542]

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]

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]

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

[@RKmndo]

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

[@RKmndo]

@@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.

[@kevinvanderhyde4897]

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]

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

[@danieltsuedo334]

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]

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]

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

[@conradap]

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!

[@vancejochim1439]

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]

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

[@musicman8270]

Don't forget the used Lexus option.

[@andrew.woolman7449]

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.

[@L3x4Pr0ne]

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.

[@vancejochim1439]

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

[@im4point]

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

[@xxBLKSNXxx]

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

[@jasonzhang7933]

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.

[@artchem1]

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. 🌟🌟🌟🌟🌟

[@yungactivist]

The amount of cars I seen repossessed this month its crazy

[@GateHacker1]

What do they do with those vehicles?

[@yungactivist]

@@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]

@@GateHacker1 They go to auction.

[@wlonsdale1]

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

[@b4cats1]

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]

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]

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

[@CBL138]

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

[@stevearita3267]

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!

[@brandow6370]

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

[@TheOzthewiz]

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%!

[@idrivearttabletennis]

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]

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

[@nicksherman2]

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

[@gspainting11]

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

[@joejones5653]

I think it is his dad

[@DekiaryCarter]

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

[@crewmax4240]

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.

[@Dcopeland62]

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.

[@alexanabolic5099]

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.

[@obtryce7070]

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

[@MetricScout]

The majority gets a car every 2-4 years wow. We just buy and drive until they run down or until they are on their last leg of life.

[@edj5532]

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]

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

[@georgiesland7315]

Y’all are growing so fast bro in 4 months

[@CarEdge]

It's fun!

[@georgiesland7315]

Your Auto Advocate keep the videos coming very very good info

[@sterns28]

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.

[@Gooch8181]

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.

[@DanielGarcia-zz9eg]

In 09 I got the 0% 4 years .after 4 years of payments I have gone 6 years without payments. my RAM, still looks new. I'm not a " trade in every 3 years" I run my vehicles 10 years or more. Because technology changes alot in vehicle. 10 years from now alot will change . Every 3 years it's just one or two new items added So I'm going to get the 84 0% And about 2032 vehicles will change big. I think every 10 years or more is a good range to buy new. Plus these new cars are too expensive compare to 10 years ago

[@wlonsdale1]

And you'll pay MSRP

[@dddtrump]

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.

[@peteroc25]

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

[@CarEdge]

Hope you enjoyed and found it valuable, Pedro!

[@peteroc25]

@@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]

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

[@ElmerFishpaw]

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.

[@Drumbeat52]

I bought a 2014 camaro in 2018 for $17,000.00, added a body kit, fiber carbon viper hood, rear spoiler, side spoilers and caliper covers for around $4,000.00. People do not know what year it is and think it's new, plus they ask me if I paid $60-65,000.00 for the car! I wanted the look of a cool car without the cost required for the original. Perception is everything! The Private book on on the original car is basically holding to the purchase price I paid. Good deal I think. Car had 14,000 miles when I bought it and it only has 18,000 now and it is everyday driver. You can have your vanity cheaply! lol

[@TheOzthewiz]

Just because you added some "cosmetics" does NOT alter the fact that the car is STILL a 2014! And I don't know what parallel universe you're living in, but that Camaro has a HIGHER depreciation rate than typical cars. I would say that "holding to the purchase price you paid" doesn't make sense, when in 4 years the car went from $60K to $17K. Quite a price drop!!

[@Drumbeat52]

@@TheOzthewiz Wrong! The car new was $24,000.00. I was just offered $20,000 from a guy that wanted me to sell it to him. Not for sale! You misread the post. People think I paid $60-65 k! Ever look at the price of a 69 Camaro in good condition? $30,000 plus. Just saying.

[@BitterSnake]

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

[@d-block6136]

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.

[@MrMikey1273]

So my current vehicle is a 14 year old Jeep Liberty. Before this car I bought used in 2009 I kept cars 3-5 years. Now I've had it over 10 years. I'd like to buy a new Tacoma to replace it soon. My plan is to sell or trade my paid off Jeep. I plan to put down 13-15k and finance the rest for 60 months. I don't think I will ever have negative equity this way with that models resale value. I also plan to keep it well past the loan term maybe more than 10 years. I planed to get pre-approved with a credit union before going to a dealership. Of course deflect the payment question at the dealership, I know about what my payment will be for what I'm looking to pay. Hopefully this is a sound plan.

[@joejones5653]

I'd say that is a solid and wise plan.

[@AnthonyStromDesign]

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?

[@wmason1961]

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.

[@Thinkeroutsidethebox]

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

[@joebazooks]

the thing about "negative equity" is that its really not negative if you consider the material or physical equity of the car itself (i.e. the value in maintaining ownership and having a vehicle to drive). "negative equity" is really only a thing or concern if u realllly want to dispose of the car as pops mentioned

[@vancejochim1439]

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?

[@lindap.p.1337]

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.

[@thomasrossi31]

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

[@staceykaufusi339]

Thanks Ray for keeping it real!

[@lottapoorlosers]

As a younger man I would purchase and roll the negative equity consistently. With age, comes wisdom--I am now into the lease game only.

[@lottapoorlosers]

@@profribasmat217 : bet you our cowboy

[@lottapoorlosers]

@@profribasmat217 English please.

[@jasonhansen6632]

There are a lot of different situations for why people finance longer than they should. Here is mine. I am a contractor and need to buy diesel 3/4 ton and 1 ton trucks, I/we put a lot of miles on trucks traversing the big state of Texas. A crew cab, leathered 4dr 4wd diesel truck with NAV runs approx $80-90K these days. There is a good resale market for truck under 200K miles but I avg. 300-400K miles on a truck in 72-84 months and the residual value to a buyer is approx $25K so we keep them and when I finance now, I am having to finance 84 mos and still have a payment of $1100, the good news is that I only need to buy one every 7- 10 years and we run them until they turn into dirt and we can get 700K miles and they are reliable enough to drive cross country. We run Ram, Ford, and GM and they are all good for the long run. I go for the oldest model left on the lot to try and get the zero interest and rebates. Some people were saying you should pay cash or you can't afford it, Why pay cash for a truck at zero interest?? there is no reason to pay it off early if your not benefiting from saving interest money. When a salesman asks you what do you want your payment to be, i allways say "$1 dollar" lets work from there and see what it turns out to be.

[@MrSafetyForever]

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

[@demetriusladson7248]

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

[@bullpup33]

Its not free money. The interest is built in to the purchase price. Zero % interest is a scam. You don't get the sale price , since you are not eligible for rebates with 0%. Its a lower rate, but not zero. Always get your own financing. Don't disclose it until the end. Dealers hate it since you just turned the table on them.

[@turbansworldwideoneloveone6157]

Please tell me the best way to get my own car loan?

[@KevinExclamationPoint]

Couldn’t agree more. No video on any channel I’ve watched so far raises this point. It’s absolutely true. I’ll consider the deals to be great when they offer rebates in conjunction with 0%. Right now those long term 0% financing deals are just preying on the “suckers” that let their wants win out over a sound financial decision.

[@bullpup33]

@@turbansworldwideoneloveone6157 you need to shop for a loan the same way you shop for anything else. Start by applying online to a local bank/credit union. You can also use Credit Karma. When I purchased my car the dealership approved me for 8.9%. I filled out an application in my bed Saturday morning. One hour later BofA approved me me for 3.9%.

[@MrZola1234]

The depreciation happens regardless of the loan terms. If you have the discipline, you do get value out of having a 7 or 8 year loan. You can take advantage of the time value of money by having lower payments. You can pay more than the regular payment and this will improve your credit more than paying on time and if you are ahead you can give yourself a deferment at any time. Not saying it’s better to take out a longer loan, but it isn’t all bad.

[@mrg3284]

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]

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]

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

[@caffeinelife]

I have a zero percent loan. I still pay 200% of my defined payment. Instead of 60 months I’m paying it off in less than 3. Yes... I know... “free money”. It’s better for me to take that money and invest it as soon as I can start doing that.

[@scottc6946]

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

[@mg19cal]

I'm going to be done paying off my son's private school tuition and my car payment at the same time. It's DEFINITELY going to be a savings bonanza from that point on

[@CarEdge]

Congratulations, now go celebrate, go on a really nice vacation... oh yeah, stay home and order delivery. Sorry.

[@mg19cal]

@@CarEdge I'm saving up for when I *CAN* go on a vacation 😁

[@rockbay79]

I bought my first "Foreign" car, a brand New 1971 Toyota Corolla 4-speed stick, AM Radio, 4-cylinder 1200 cc engine, and no air conditioning for $1200.00 dollars!!!!! In 1971, gas was 0.19 cents per gallon. I could drive all week on $2.00 dollars.

[@TheOzthewiz]

Figuring for inflation, that $.19/gal back in the good days of 1971with average income of $10000, would equate to $1.19/gal with today's average income of $63000. Just the other day, I paid $.94/gal for E85 up here in Wisconsin! So, "gas" is CHEAPER now than back in 1971!!

[@dhobbs1974]

You only live once so get what you want. I mean what exactly are you saving money for? Just to get old, die and have someone else spend your money that you worked 40 years of your life to save?

[@vw8886]

Retirement. You can't work forever.

[@wlonsdale1]

You don't have to be stupid with your money. What if you lose your job or your health?

[@dhobbs1974]

Yeah ok, like a few percentage points on your loan is going to make the difference in your retirement smh

[@joethebar1]

My daughter just bought a new car at 72/.099%. Cost of borrowing was cheap- she was gonna use 10K as a down payment; I told her to put down 6 and that would ensure she would never be underwater in this car.

[@newtec-kd6vy]

Why would you buy a new car when you don't have the old one paid off??

[@odnetnin4720]

I took out 60 months on my first new car. Still driving it at 162 months now. “Free” rent now for 100 months. Glad it’s a Honda as I’ll need to drive it a couple dozen more till interest rates fall.

[@fabialvarez4390]

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

[@tneal3526]

Zach, your pop is the man.

[@agrinsonis]

36 month loan with 20% down is what I suggest. If possible no matter how long is your loan. Try to pay the loan off in lest time. There is no penalty for paying any loan off soon. I always qualify for zero % interest when I buy my cars.

[@jason76065]

When you say most people can't afford to buy a car with cash, I think that it's just a fact that people don't want to, the last car I bought was $900 the first car I bought $2,000 Second car 4200 Third car 9000 4th car 12,000 Fifth car 9000 Sixth car $900

[@itsraheem]

First car 3.5k Second car 1.6k Third car 1k 4th 1.5k 5th 1k The key for me, is I can sell the cars for the same price I bought them

[@freethinker5225]

84 months 17% interest...with the credit score I have it's going to be the only way to restore my credit in a short amount of time and hopefully with a refinance option we can get better interest rates and I'll be doing principle payments to knock that interest down asap

[@kianicol]

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

[@VikramTuscano]

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.

[@pressendforspanish]

If you're not paying interest, there is no reason to take a short term as apposed to a long term. Just make bigger payments that all goes to principle and what that does is leave you breathing room if you are short of money one month.

[@gwillis01]

There is a difference between ideals and reality. We should not heavily and intensely shame those who are not in a financial position to do the ideal financial move.

[@CarEdge]

Nicely said Gwin. Happy Holidays to you and your family, Ray

[@cyrilboco4623]

This is amazing teaching lessons.

[@kimdavis5631]

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

[@thehonestrealtor9070]

Ray, on a 0% the longer the loan the cheaper the dollars you pay back with due to inflation. You could invest the money saved and come out way ahead. Most people who can get 0% can put enough down to avoid negative equity. Also buy cars that hold value better like a Toyota instead of an infinity that drops like a rock. It all depends on the credit. If it's a high interest rate shortest loan possible. If you have great credit you can make a 0 or low rate work to your advantage.

[@DanielGarcia-zz9eg]

Stop trading, keep the damn ride

[@stephendibari5010]

Daniel Garcia exactly. Getting into a new car every 3 years is a waste of $. If buying new, Buy a new Toyota/Lexus and keep it for 20 years. I haven’t bought a new car in 20 years, my last used car I bought was a 2013 Lexus last April 2019 with only 30,009 miles. I’m the 2nd owner. This one will last me for 10+ years since their dependability/reliability are #1 in the industry. Yeah I financed it, but I only paid $18k on a 6 year Lexus that when new the sticker was $48k !! Let the first owner take the big hit on depreciation.

[@louarmstrong6128]

Buy a beater and live with it...stop throwing the cash away

[@BrianYYH]

There are people out there that want the newest cars every 3 years. And they can afford it. Who am I to say what they want to do with their money?

[@mjj5276]

@@BrianYYH Exactly.Money is there to be spent and enjoyed however which way you please. Ya can't take it with ya.

[@betterthanemril988]

Sometimes people just don’t want to keep paying for repairs every other month for an old 250,000 mile car.

[@JuggyGales1977]

The biggest problem with negative equity is how it is accumulated. If you're constantly severely upside down you're not getting into purchases wisely. Rule #1: DON'T BUY any of the useless F&I products. If you're going to keep the vehicle for a long time get a factory backed service contract IF you're getting a 0% loan. If not, wait and buy it later on a 0% credit card or 0% payment plan. You just bought a new vehicle with a bumper to bumper warranty. My 2019 Hyundai's full coverage is 60,000 miles. Rule #2: Don't trade your vehicle in. Sell it privately. Car dealers aren't charities. Why do most people donate thousands of dollars to them when they trade a vehicle in? This is the biggest source of negative equity, financing and paying interest on trade losses. Rule #3: Shop for smoking deals. Regardless of what type of vehicle you want look for big dealer discounts, big rebates, and dealer cash (aka trunk money) to offset taxes, fees, and depreciation.