How Much Car Can I Afford (20/4/10 Rule)

[@WhiteBoardFinance]

*Real men wear pink.*

[@gavindabest]

Keep it up :D

[@WhiteBoardFinance]

@@gavindabest lol thanks gavin!

[@123bigred]

I prefer blue or red...lol.... keep up the good work. These videos are very helpful.

[@WhiteBoardFinance]

Lol thank you! (My wife bought me the shirt I had to wear it)

[@angelpayan4229]

Hey Marko, you have no idea how clearly you made me see with your financial schematics. My gf and I are saving for here electric car at an engrossing rate. Thank you for all that you do and keep up the astounding amount of effort you put into your videos. Oh 1 last thing, tell all these Neanderthals that PINK was actually a masculine colour back in the day. People are always the 2 I's: Ignorants and Idiots lmao

[@510jesus]

Unfortunately most people follow the YOLO rule. 😅😂🤣

[@missnina198705]

510jesus I wanna get one so bad I’m broke and I want a luxury car too. It’s like I’m self sabotaging but YOLO ... jk kind of 🤪😏

[@510jesus]

@@missnina198705 YOLO.... what about the peace of mind of not having to deal with monthly car payments and higher insurance costs. I just like the freedom of not having any payments, plus I can invest that money and get monthly interests and/or dividends. It's addicting seeing your money making more money for you :)

[@MoneyGrowthAcademy]

Haha so true, we just discussed why you need a MLTL mindset (might live to long)

[@510jesus]

@@MoneyGrowthAcademy long life would be nice. I'd be pissed if I don't get to enjoy these healthy savings. Lol

[@omargenao7452]

Facts lol

[@tommieboi707]

I only use the 4 rule. Buy a car for 4k or less and drive it till the wheels fall off.

[@patrickboyd3364]

Smart man.

[@helgavillavicencio9352]

how many times a year do you do that?

[@tommieboi707]

@@helgavillavicencio9352 if you pick a good car(honda civic, toyota corolla) it can last you 10 years or more. Imagine saving 400 to 500 dollars a month or 4800 to 6000 per year by not having a car note. Imagine how much you can save in 5 years....10 years.....imagine investing that money....buy a cheap RELIABLE car and you wont have many issues.

[@wilmer007]

@@helgavillavicencio9352 once every 10 years.

[@marcin97]

I have a 2007 Altima, now 12 years old since new. Just like my marriage, dents here and there but looks great cause I take care of it :-)

[@robcrossan6274]

I'm a Mechanic and so I always felt there was no point to making payments when I do not have to pay labor to fix my cars, I just fix them myself. I made payments on a 6 year old Camaro SS and even tho it was older with some mileage, it still felt like I had to put alot of cash aside to pay for it every month. In my opinion, it's just not worth it. Do your research and find an older vehicle that has a good reputation for reliability, and find a good shop that will take care of you. Save the money you would be spending on a payment, and also, scratches, dings, and dents and wear are inevitable. Its alot easier to get over a dent in a 10 year old beater than a brand new car your still paying for.

[@elkofcanada5003]

I used to work in sales at Honda. I can tell you NO ONE did this. You'd constantly see 84 months with nothing down. People buy way more than they can afford. ....... Average person making 60k/yr usually bought a $40K car. Never ever saw anything less than 60 months. It's scary. No one can afford these new cars you see driving around.

[@WhiteBoardFinance]

Unfortunate. Those people will always be broke.

[@kingcrab750]

@Josh S Not necessarily true if you have excellent credit and can get good rate. I bought a $30K used car three years ago, wanted pay cash but the dealer offered 0.99% rate for 3 years, no down payment. I put the $30K in a savings account earning 1.5% interest. My monthly payment is about $860.

[@dilididli2274]

had a 60 month themr on my first new car and I have cleared it in 3 years. The salemans told me it was the first time he ever saw someone doing this. Personaly I always take themr that would let me pays my debt even if things goes wrong. So if everything goes as planned I just end paying more.

[@kingcrab750]

@Josh S I bought a used car, no rebates to speak of and price had already been negotiated before I told the F & I guy that I wanted to pay cash.

[@510jesus]

That's crazy considering car insurance is through the roof in Canada

[@jester92345]

The most important thing you said here is “delayed gratification “! This is the real money smarts that people miss out in.

[@chainsawcharlie2]

Yep. Time always beats money.

[@financiallyinvested679]

It’s a numbers game, people react to emotions rather than how the overall numbers affect them. I’m the complete opposite (it drives my social circle nuts). Numbers come first for me. If it puts me behind financially, no thanks.

[@Miakel]

That is how poor stay poor. They have to have everything now. Save, damn it save!

[@dlckddyd76]

@@Miakel save save save and baaaaam! You saved millions of dollars but you never get to use it cuz you died unexpectedly. Saving isn't the answer. Planning how to use the money you made is.

[@moisestamayo5809]

@@dlckddyd76 Exactly

[@jacobstrouble6631]

After following this kind of rule for 20+ years, I'm ready to bite the bullet and get something super expensive and nice. Driving old/used cars after a while starts to mess with your self-esteem and you just want to have something nice.

[@caleblammers6032]

Then work for it

[@sabokiTV]

@@caleblammers6032 seems like has for 20 years, douchebag

[@davidnelson4347]

If you need a nice car to have high self esteem then you will never have high self esteem

[@andersnielsen6044]

@@davidnelson4347 Spot-on :)

[@S3NDP13]

@@davidnelson4347 Go ahead and drive around in a Toyota Prius then. I'm sure your self esteem will be unshaken.

[@Rali272]

I did this for 10yrs. Unfortunately my divorce took all of it. Don’t get married.

[@WhiteBoardFinance]

getting married was the best decision of my life

[@lifeisgood070]

@@WhiteBoardFinance How many years and how many hours are you home / together during the week?

[@WhiteBoardFinance]

A decent amount. But we also give each other our own space and time with friends

[@J88HNT]

Marko - WhiteBoard Finance You’re married which means you’re at risk of the divorce machine. 70%-80% of divorces are initiated by women so learn how to mitigate the damage. Follow Entrepreneurs In Cars, Rollo Tomassi and buy his book The Rational Male.

[@J88HNT]

Marko - WhiteBoard Finance great channel btw.

[@QuadGuyCy]

Who doesn't keep a vehicle after it's paid off? I bought my last truck used and kept it 21 years.

[@brookebrady5817]

WOW. Thank you for your help. I am a girl in her mid 20's and buying cars has always been so stressful and confusing to me. I need to get a car soon and I didn't know if was making financially the right decision and because of this I am more confident in my decision. This video REALLY helped me.

[@moosemoose1757]

marry rich

[@curlyqween34]

@@moosemoose1757 not enough rich men

[@curlyqween34]

@@moosemoose1757 and no one wants to have sec with old men

[@rupert1438]

@@curlyqween34 this comment 💀😂😂🏃‍♀️🏃‍♀️

[@curlyqween34]

@@rupert1438 💀💀

[@MichaelCarulli]

I did 17/6/13 and I'm doing alright. I think 20/4/10 is really hard to achieve nowadays. It's more of a guide, but the most important part is the last number - making sure your car payment doesn't exceed a certain percentage of your total income.

[@CanuckBacon]

Good luck, I make 19.50/hr meaning my total car *Expenditures* should not exceed $312 a month, find me a car that doesn't use half of that in gas alone, and the other half of that in insurance alone and that isn't absolutely falling apart

[@jollysouwester56]

@@CanuckBacon I drive a 2017 ford ecosport, bought second hand with 20k km on the clock, montly payment is about 165,82 usd, gas lets say 100 and insurance 100. that comes to 360 which is more than your budget but im still young so insurance is high. I don't know where you live but I think most people are just full of shit, making up reasons why they need that brand new vw golf.

[@theskiesrainfire]

Gas is more like 150 and I’m 31 and my insurance is 219 a month. No accidents or anything. In an old scion. Explain to me how I can find a car for 50 bucks a month to stay in my budget. I won’t even be making 60k next year.

[@joeyhenderson1624]

@@theskiesrainfire 150 a month for gas ??? Bro you driving too much

[@CJ-fh5xq]

@@theskiesrainfire Holy crap $219 a month? You have a DUI or points on your license? I drive a 10 year old Hyundai Elantra and I only pay $40 a month in insurance and I'm 24...

[@starmkd18]

America's financial problems Calculating stuff using gross income instead of net income after health insurance Gross is not take home pay And to add the fact that almost everything people buy, they have to account for around 10% in sales tax

[@WhiteBoardFinance]

Agreed

[@micheleogle6036]

Yes, I would like if he took net income into his calc. People work with what the bring home in their check. However, to be fair, loans are are often based on gross.

[@jselly2013]

100% agree. Gross means nothing. Also deduct rent if you are living in LA, NY or any other expensive area

[@yateswebb]

Lololol

[@Republic1ders]

Lmao facts

[@onlybryan47_]

Currently riding a bike to work everyday. There’s days where I see the blessings in the gray. I increase my heart health/stamina. Don’t have to worry about gas prices (Cali gas prices) iykyk. But there is days where I contemplate getting a reliable car not something way out of my means. It’s just a long patient waiting game. Having to save money for it

[@TheRandomeez]

This guy is the math teacher that we all deserved in school.

[@WhiteBoardFinance]

Lol thanks Zahid

[@ERICK-di1yz]

Damn g, they should really be teaching these kind of things in school 🤦‍♀️🤦‍♀️

[@gilph3]

Inflation and shortages absolutely destroyed this vid

[@CanuckBacon]

He never even factored in insurance

[@browning442]

you are exactly right, but it doesn't get taught properly or at all, hence parents need to do this

[@stephendverner]

If you know what to look for you can get a solid car for under $5k. Sharing your videos with my 20yr old son who is a Marine in hopes he doesn’t go buy a car he can’t afford.

[@rab3_cle]

Its amazing what has happened in the past two years, this video needs an update. Out of the 2200 cars on carvana today, 850 of them are under 20k, and NONE of them are under 75k miles.

[@mulletsquirrel]

Don't buy on Carvana...

[@gilph3]

Yup

[@100percentSNAFU]

I try to keep a car 6 years, and take out 4 year loans. So for two years after my car is paid for, I put the equivalent of my payment in my savings account each month and pretend I still have a payment. So, for example my last car was $360 a month. So I saved around $8500 to put down on my next car. I actually bought a more expensive car the next time and had lower payments for 4 years (about $330 a month). I am now almost 6 years into my current car and it's in really good condition, so I might press for 7 or 8 years on this one, and have even more to put down on the next one.

[@WhiteBoardFinance]

Smart

[@MoneyGrowthAcademy]

Solid plan, pretty much what i would advise people to do when they came onto my lot to buy a car

[@markhou]

Weird flex but ok

[@cristianmendoza6301]

Or if you actually got a car they maintains value then you could have just used that as a down payment or sold it for around 8,500 bit whatever floats you boat

[@dawsonedge7333]

Why get rid of it so fast?

[@vdub4utube]

You should always go the longest term as long as interest doesn't increase, then pay as if it is a short term loan. This way you can always fall back to the lower payment if needed or pay it off faster if you can.

[@ericstewart9665]

This is an okay strategy when using the old standard 60 month rate but it diminishes with longer terms because the rates up up too far for the longer terms..... Also one must be very disciplined in paying well above the required payment because if too casual you'll 🔥 yourself as the longer loan is set to amortize over a longer time and if one doesn't aggressively attack it earlier and often you'll lose.

[@daroga]

Usually interest rates increase as the term increases.

[@whatsitwhosit]

Agree with you. Luckily my credit scores have been good to great which helped with my interest rates. I always go for 72 months and always over pay. That way if I ever get in a pinch, I only have to pay my low-ish monthly payment. Recently paid off my current car and only paid half of the projected interest....I'm not unhappy about that.

[@atcjoe1600]

Yep,that’s what I did. Around Christmas time I go back to the lower payment to have extra money. You also have to be diligent to send in the extra the rest of the year.

[@karengrant3468]

Like paying an extra mtg pmt a year takes off 7 yrs on mtg...

[@JesusMendoza-gj8jj]

i didnt buy my lexus until i had all the money needed even then i just kept the 30k and financed. keeping your cash is worth the few grand your going to spend on interest.

[@DanielIles]

I love how you lay out the calculations in your videos! It really sets you apart and helps everyone watching tremendously!

[@WhiteBoardFinance]

Thank you Daniel!

[@l00katy0utb3]

According to this math, I should be driving my mom's car.

[@ruinunes8251]

Mate, better drive your mum’s car than no driving car at all.

[@khadijaking711]

Amen 😂

[@ruinunes8251]

What car is your mum driving?

[@laobe5119]

I did

[@newchangeunlisted_viewer5594]

Lol same

[@SlyEvoIX]

I’m a car guy so I’d rather eat ramen and clip coupons so I can afford a nicer car. My M3 was paid off in cash but it took many years of saving up. One strategy I use is to take advantage of dealer finance if it’s lower than your rate of return for investments, so your investment income can cover the interest/car payment. Also, buy used.

[@DavidJao]

My first four cars were: a seven year old Buick, a five year old Buick, a 12 year old Corolla, and a 15 year old Camry, all super cheap used cars paid for in cash. Sure, I had above average repair bills, but nowhere near the cost of new car payments. I drove those cars for a total of 20 years of adult life and saved the car payment every month in savings. I've never paid a car payment to someone else -- only to myself. Last year I bought a brand new Tesla paid in full in cash using just a fraction of those savings. Anyone can do this with discipline, smarts, and time.

[@d-block6136]

Congrats David! The most important word in your comment was Discipline!! Most people dont have it...its a work in progress for me!!

[@100percentSNAFU]

Years back, I got a free Buick (my grandma's car when she got too old to drive). Had to put about $1500 into it for new tires and a couple minor repairs, and it was basically a cream puff. Had it two year and my uncle wanted it for his grandson. He knew I wanted a pick up truck, so he offered me his Toyota Tacoma, which was valued at about $12K, for $8K plus the Buick. That was a good deal because the Buick was 12 years old at the time and not worth much. So I did it, kept the Tacoma a year, and then traded it in for a new truck and got $12,700 on the trade. So I basically made money on the truck. So basically, I had 3 years of vehicle usage, and made $3200 off it. $1500 into the Buick, paid $8000 for the Tacoma, then got $12,700 for it. The truck I bought in its place I have had 6 years now and is still running strong and has been paid off for two years, and I have been saving for the next vehicle, which I am in no hurry to get as long as my current one keeps holding up. All this built off of a free grandma car I put a few bucks into.

[@mikesantos011]

Bought a 13 year old corolla off craigslist for $1500 last year as a commuter car and have had ZERO issues with it. Took it to the dealership for an inspection and they could find nothing wrong with it. Also insurance was only an additional $10 a month lol. I will never finance a car

[@samkeepintherockalive]

Good for you! But, check this out. I went 8 years with out making a car payment, and when I wanted to borrow money, nobody wanted to lend it to me because I had no credit history! Making car payments is not evil. It will help you obtain credit. The system penalized me for not financing a car!

[@DavidJao]

@@samkeepintherockalive Car payments are a horrifically expensive way to build credit history. You can get a credit card and pay it off every month and do just as well.

[@HiwasseeRiver]

Still driving my cash bought 1996 Tacoma, super low total cost over 20+ years. No regrets. Your third scenario actually works and it can be one way to free up funds for investment. Driving a beater to the bank is awesome!

[@backy86]

Love it! 😅

[@scraphaulin]

Biggest problem buying the car in cash....most people won't save what would have been their monthly payment. So, they end up driving a beater and they are broke.

[@1005RyAnNnN1005]

they key note i took from this is "delaying gratification" and living below your means :) Thanks for this awesome video man.

[@vezonf3nrak]

Why not live at your means instead of below or above?

[@1005RyAnNnN1005]

@@vezonf3nrak living with in your means is totally fine but above it is why some people are living pay check to pay check. That's just me tho.

[@Picmanreborn]

That's what I took away from it too

[@typhlosionisbest]

@@vezonf3nrak Living directly at your means doesn't allow you to save much, and that means you have no cushion in the case of an emergency. Accounting for every dollar is great, but spending every dollar is not.

[@amdg01007]

But have you read millionaire fast lane?

[@unpopularopinion149]

I make $250k a year and bought a $8000 Ford Escape 20 months ago. I invest $2000 a month into vanguard VFIAX..no need for me to get a $65k pickup truck and take away from the opportunity costs of my investments compounding annually.

[@LaidleyM]

I’m putting down 50%, financing over 60 months (it’s the same interest rate as 48 months) but paying well above the minimum payment, and with that increased payment putting 10% of income towards the payment. It’ll be paid off quicker than needed, give me flexibility if there are months I need to reduce my planned payment, and still leaves me cash leftover to invest and have in a safety fund. This is all to buy my dream car, which in itself has some intrinsic value to ME. To some, a vehicle is solely to get from point A to point B as economically as possible. I understand that perspective too.

[@shaneikiyasteel7073]

This has helped me so much, I have a beamer and I think I will most definitely follow this rule of sticking with my mock budget of saving my monthly car note for a couple of years so that I can buy it outright or finance my car at a lower rate!

[@llandho4998]

in short. Buy a beater. Save up for what you really want down the line and pay for it in all cash.

[@stereomaster4231]

Great video. I just made my last payment on my BMW in April. Never again will I take on a car payment

[@tammywheet6931]

Amen to that. Me either God willing and the creek don't rise! Lol

[@stereomaster4231]

@Fuhq Boi burner account

[@Drogers8675]

You should lease a new BMW.

[@jamesduggan5846]

Love my BMW. Take really good care of it and you will get your value out of it w/ many years of service. Please don’t sell it or trade it b/c you will take a bath in depreciation. Just drive it to the end and enjoy.

[@hubertkam7647]

if you spend that money on a 1980s bmw that you bought for 40k 5 or 10 years ago you would have 200k+ now

[@nico3641]

No girlfriend during the first 4 years while you're saving and driving the beater car.

[@WhiteBoardFinance]

Haha true

[@joker927]

Right? and that means you save even MORE! haha

[@missnina198705]

😂

[@danstrayer111]

There won't be a decent one after that, either. Besides, any bitch who evaluates the merits of another human by what they drive has no place in my life ever.

[@khadijaking711]

😂😂😅 best funny comment 😂

[@cubanjavonne]

This video came right on time!! I was in the market for buying a Luxury car but this makes so much more sense to hold off on doing that. Thank you for this valuable information. It was truly helpful.

[@-zerocool-]

I used a low APR bank loan to purchase my car, this opened my eyes to paying it off earlier because I can simply login to my account and pay off extra each month, ending it far far quicker! Thanks again Marko you legend!

[@HonestFinance]

Great video Marko!! It’s insane how much we spend on cars and how much we could be saving instead

[@WhiteBoardFinance]

Thank you!! Thanks for stopping by

[@richardgarcia6201]

Because a car is our feet lol

[@dharmaram7527]

If you have a long commute or driving is essential to your line of work than yeah you can see why people put an emphasis on driving a newer car. All those hours wasted sitting in traffic it makes sense why someone would want to drive a car that’s reliable, safe, and comfortable.

[@mylesthemyles7081]

You can always pay off the loan early as it’s a simple interest loan. Pay it off whenever with no penalty

[@Shredxcam22]

I enjoy the math as an engineer. Keep it up and I would enjoy some advance finance math even if that means some calc. Just not on cars. I drive old junkers

[@antwandurham9965]

Mech engineer here!

[@Shredxcam22]

@sylenceexposed most videos don't show any math and skip it or omit it since most people don't find it entertaining. I wish he had more advanced math but I get his channel would suffer viewers if he did a ton of math.

[@gwillis01]

Delayed gratification is what mature people do. Don't throw a toddler temper tantrum while living in a middle aged body.

[@michaelrivers4363]

Differed gratification...... a lost art. Thank you!!! Great job. I almost jumped on a BMW...... It can wait 4 years. I appreciate you. New subscriber!!!

[@TheShlongman]

But at the end of 4 years he would still own a 22k car, just would have been able to have been driving it for the 4 years if he financed it. So it’s under $500 a year to drive the nicer car for four years ($1900 interest) The only benefit of buying a beater and then saving for a car is after the 4 years your car wouldn’t have depreciated.

[@ericnunez3316]

But he will save on not having to pay interest on that 22k car. Plus the beater can still be sold

[@domthemom2270]

@@ericnunez3316 yeah, but 1000 over 4 years is 250 a year avg. That's just like an extra fee in the title and registration. If it's also more reliable, then you spend less time maintaining it, and time is money.

[@tinyman520]

Solid advice. I bought all my vehicles with cash until my most recent purchase. I’m not great with finance but I hate debt. I would buy a vehicle drive it for several years give it away (literally for free) when I was tired of it or started costing me more than car was worth. My most recent however I couldn’t resist. Tired of dreaming of a muscle car I may one day have enough cash to buy, I went out purchased a loaded scat pack charger. So far nothing but smiles and I’ve managed to pay more than my monthly payments. Hope to payoff in 3 years and buy another muscle car. Worth every penny!

[@amandaburleson2035]

how is it going with your scat pack. do you regret buying it yet

[@tinyman520]

@@amandaburleson2035 not yet!! I don’t think I’ll have it paid off in the three years I wanted as that’s coming up, but possibly 4. Other than alignment and new touch screen everything has been great.

[@Choocho522]

This is great advice but realistically for most people they don’t make that much money and driving a “beater” isn’t always a money saver

[@hollowfragment237]

I bought my first car at 20 for $3k and only put about $900 in maintenance in two years. I’d say it was a good decision, it’s an old civic that was well kept and I plan on riding it until I hit 200-300k miles on it. Bought it at 140k. The engine was rebuilt. It sucks not having a flashy car at my age but most of the ppl my age are usually broke or have parents that are able to pay for such things. I don’t have any car payments other than insurance which is only about $400 for 6 months. I do plan on holding my car for a while then I’ll consider using this method to buy it. I was thinking putting $7k for the down payment for a $20k car instead just to keep my monthly payment below the $300 mark. I noticed they try to sign you for 72 month lease and that disgusts me. Thanks for your video it was very insightful.

[@AnishChari]

"Hey Marco I can't afford to pay cash, what's the best way to finance a car?" "Buy a bus pass."

[@WhiteBoardFinance]

Lmao!

[@zakariahlafreniere1332]

Anish Chari Uber

[@vogahl34]

Wise words you say!

[@jcues03]

uber cost? 500+ /month

[@mikehusky3967]

🤣

[@Boise_guy123]

"delaying gratification" is such good advice. As a reformed car guy, I've seen friends by new corvettes and then have their mom transfer money to cover them for dinner with friends. They are still like this (yolo). I've driven as old rav 4 with 170k for about 8 years and am just now thinking of a new car which I will be paying cash.

[@samkeepintherockalive]

Great video! One of the best lessons my dad taught me was to put down 25% of the cost of the car and to NEVER finance it for more than 48 months.

[@damonsmith7661]

I know you want that new car,hell we all do...but just keep going to work and saving your money.....you'll get there I promise!!

[@tieylandrun132]

DaMon Smith it’s funny you say that it takes money to make money

[@Koushi82]

Nope rather save money

[@Apollo885]

I think you missed touching on one of the biggest benefits to buying the beater for the first 5 years. Not only will he have 22k saved, he'll also have a used car he can sell for probably 4k meaning he can actually purchase a car worth more like 26k. This is also additive, meaning his next car purchase he will have a 5 year old car, worth maybe 8-12k and can then afford a 30-34k car. All with the exact same payment. (which is money always sitting within arms reach incase his circumstances change)

[@johnj3577]

I'm the type that saves the $458 a month, builds it up to $22k then buys another $5k beater!

[@smora6054]

*buys 5k beater, spends 5k in maintenance per year, only lasts 2 years*

[@adia000002]

@@smora6054 that literally is happening to me right now lmfao

[@DextahPC]

@@smora6054 Don't buy a shitty $5k car then. Do your due diligence. $5k hardly gets you a "beater". I think of a beater being around 2k or less. I bought a 2008 Civic SI for $6k and it runs great. Unfortunately, I had to spend $1200 to replace the AC compressor the first year, but everything else has been preventative maintenance that you'd have to do on any vehicle. New tires, oil changes, replaced battery etc. BTW, that gives me no car payment, almost zero depreciation, and a reliable vehicle that won't leave me stranded. Not to mention it's an SI so it's a little sporty too.

[@GoAdventure83]

@@smora6054 I bought a $5,000 car 5 years ago with 130,000 miles. Haven't done anything in maintaining it you wouldn't do with a brand new car. (Oil changes, brake pads, etc.) It now has 176,000 miles and runs just as good as day I got it. This car would last another 10 years if I wanted it to. I don't get how people think $5k cars are junk. I guess people just need to justify getting something nicer than they need.

[@Bodangers]

@Ivan Schlotzky what if he doesnt care about getting laid

[@TheGlennAbides]

That's good advice. I wouldn't want to take my car on any long trips so I will rent one for a weekend getaway. And if it breaks down just call the rental place and say "Your car broke down bring me another one" is awesome.

[@jordan6266]

Good rule but if you boil it down basically there are two things you want to keep in mind: borrow less and pay it ASAP.

[@NeoAndersonReloaded]

With this formula I can do a payment of $900 but I chose a 2014 accord with $250 payment. Its a mindset!

[@RelaxAndSmokeMeth]

Long live Honda.

[@Shaolinof36thChamber]

My folks got a new Honda Jazz (showroom car) back in 2009. Until today not a single repair. Cheers on to the next years.

[@Lex-Rex]

Rolling fat ese, but for some strange reason, I don't believe you.

[@jeffghant4760]

@@Shaolinof36thChamber No repairs for 10 years? Not even a check engine light?

[@Shaolinof36thChamber]

@@jeffghant4760 Yearly inspections. Zero repairs so far. The car is still running on Day 1 parts. Besides the tires of course.

[@peterock9682]

This is all common sense but people don’t care about interest or future saving, people want a new car and they want it now. Screw it tomorrow ain’t promised .

[@Speedysnail9999]

For all the high school kids watching, here’s a budget friendly option: 1999/500/0. 1999 Toyota Camry, $500 down, $0 monthly payment. Those bad boys never seem to die.

[@jessewarren9177]

I have not seen a 1999 Honda or Toyota for less than $3500 in years. Those days are long gone.

[@sw1mXfr3ak]

My 2001 has 150k miles still chugging along!

[@a-zmindset6624]

Good video, i t really depends on your EXPENSE situation. My rule is 50 percent of your net income should cover ALL your bills. Ex. If you bring home after taxes $3000 a month. Total expenses should be no more than (1500). Take the rest and invest and get yourself and emergency fund to cover car repairs house repairs etc. I have a newer bmw and a hyundai that I own (paid cash for it.) I say this because sometimes you can t just buy a car cash. So one may have to finance and have bad credit. Which happens. My wife finaced years ago a 2002 audi. Great car super clean. Her credit was bad so her interest rate was a whopping 23%. With her beater trade in car was 8200 out the door. Payment was 238/ month for 54 months. We paid it off in 2 years. Yes we paid some interest but the car lasted 5 years. No payment for 3/years) In closing everyone situation is different. Just dont get a car payment that will put you in a situation where you can t invest or you are living paycheck to paycheck. Wish we could have paid cash but that wasn t an option at the time. Good vid👍

[@andrewa626]

I'd rather spend 5k for a used Silverado that has damaged seats but needs little to no drivetrain work, than spend 10k for a Mercedes that looks amazing inside but is about to fall apart. Just me

[@henrycarey5657]

So many people need to hear this. People in my life already are asking me if I’m gonna start looking at cars after I paid off my current one, and the title isn’t even here yet! It’s crazy to me, I’m literally just setting aside my monthly payment in my brokerage account and I’m handy to where I can maintain my current car and save money that way. Like you said, delaying gratification will be a benefit in a few years time when I’ve got a sizable amount of money ready when the time comes for a new vehicle.

[@TicklerDude]

I have one rule. I buy a car with cash. No payments. No hassle. No stress. No exceptions.

[@blockmasterscott]

Same here.

[@Mr.Not_Sure]

I buy EVERYTHING with cash. No way I give a cent to bastard bankers.

[@DanielleMarieW]

I keep coming back for your smile, Marko! This is really a sensible approach. I’m trying to defer purchasing an EV because they are still so expensive where I live ($46k and up) and I reckon that technology will only improve in the next few years. Used EVs have poorer range so not good value. I’m thinking a nice, cheap little gas car for the next 4 years.

[@Xander-dx6mw]

I feel this rule is likely outdated. The average annual wage is $54,000, the average savings is $3,100, and the average cost for fuel and insurance monthly is $170 (as of 2022). Based on this, the average person can afford $450/ month, less the $170 for fuel and insurance would leave them with $280 for a car payment. If they drain their saving, can somehow get a 4.7% loan rate, and stay under $280, it means they can buy a $15,500 car. That would have bought you a Dodge Neon in 1998. Based on actual vehicle sales in September 2022, the average car sale was $37,800. Putting 20% down (the average in 2022 was just 8%) would still leave you with a payment of $695 (including tax and tag), add in the fuel and insurance and you are at $865/ month. If you put down the 8% average with the average credit score (692) and get a 4 year rate based on that score (5.7%), your payment is $830, meaning the average person is spending $1000/ month on their car.

[@thisvato125]

I agree with you man. I am in a doctorate program and my student loans arw going to be 200k. I understand compound interest at 6%. I plan to pay myself a humble salary out of my future salary. The rest of my salary will go to pay if loans. I plan to pay them off on 3 years.

[@JK20239]

200k for a doctorate at 6% interest is actually worse than the car. You can toss the car and pay the difference remaining. You cant even discharge your loans through bankrucpty. If you get stuck with a 40k job. No way in hell your gonna even touch the principal

[@dilididli2274]

Personaly while trying to saves money to buy a house I was running in an old Pontiac sunfire that I had paid 1.200$ while I was earning 80 000$ a years. Turned out that me and my wife could save 70 000$ in cash in only a few years.

[@emsea1658]

costs home ownership terrifies me. im happy renting for many more years til i can buy a duplex or triplex and make income from tenants

[@ryanfaulkner181]

Marko great video and thank you for explaining all this! Only thing important for buyers to consider is inflation. Borrowing more(at lower rates) and investing remainder is potentially better return than paying with more cash.

[@cokemachine62590]

Great advice, but the truth of the matter is that most people, given the opportunity to not have a car payment, would not save that money and just spend it elsewhere. You should mention that in your next video - the biggest piece to this is having the self-discipline to actually put money in a savings account and not touch it

[@JaguarPaw1]

this is great, I'll add your video to my Understanding Car Financing Playlist, I just helped a truck driver save $13,800 in interest after we fixed his Equifax report/score, I'll do my 10yrs on KZbin helping people with their credit video next week and will tell people to come to your channel to understand financing, you break it down nice so people can understand, thanks!

[@crxmassive]

Ha, look who's here. We all can learn something from each other. I listen to Gizzy about credit. Gizzy listens to Marko about finance. :-)

[@JaguarPaw1]

@@crxmassive Marko is the man in explaining things to the common man and we always day, yeah I get it lol thanks for subscribing to both of us!

[@crxmassive]

@@JaguarPaw1 Yes Gizzy, I enjoy watching both of you guys videos. Simple and easy to understand.

[@ashvinn15]

As long I get a not so bad used card which can last for year or 2 without much trouble I don’t know why I would buy a new car.

[@aplayz5055]

i honestly didn’t think i would learn anything but i learn so much from this

[@tiffanynguyen9952]

Get the beater and last for 10 years.

[@---cr8nw]

My wife puts 25,000 miles per year on her car. I won't buy anything for her that has more than 40,000 miles on it to begin with. At about the six year mark, it's time to start looking again.

[@khas684]

Nobody ever taught me this stuff. I can only afford $5k but my family is trying to convince me it's better to finance a new car... I had an inkling that's a dumb idea but you laid it all out clearly! Thank you Marko, I'll be buying the most reliable $5k shitbox I can find.

[@flyingzootzoot9941]

A 5k car is a good car

[@khas684]

@@flyingzootzoot9941 in my country it is not, especially post covid price increases in used cars.

[@mationinfo]

It is not a shit box, Kevin. Word have power. The car/truck that you will be buying for $5,000.00 is a great investment until you have enough money to buy a newer vehicle. Cheers

[@vitskr1]

meanwhile in real world he buys car in cash, spends those 470 every month on some stuff he doesn't even need. and ends up with zero savings and million year old broken car

[@TR0LLREIGN]

There is an ancient joke where the doctor says to his patient: "If you saved up all the money you spent on cigarettes over the past 30 years, you could be driving a Ferrari!" "That's a great point Doc. You don't smoke do you?" "No of course not." "So where's your fucking Ferrari?"

[@maxlastbreath]

@@TR0LLREIGN LMAO

[@MCNeurotiK]

Makes me wish I didn't love cars so much. My current car isn't even a beater, but driving it every day kills my soul. I'd rather pay 28,000 over the next 6 years to drive a car that I like than drive a car that I hate for 4 years and not have to worry at all afterwards.

[@PrettyINCs]

If you love cars work your ass off to buy what you like. Just cut some place else. This is for the rest of us who care more about money than cars.

[@rookie4582]

Fortunately, I’ve had a scholarship for college and been able purchase a very nice modern Civic HB Sport, easily making monthly payments. Thankfully I have a fairly good job for my age. Sure, not the most cost efficient way, time can’t be bought. Rather have a nice car young than old. I’m still able to save.

[@tommieboi707]

In 6 years your 28k will be worth 5k. Thats a real good investment!

[@FOXDADDYSUPREME1]

The way I've done this is with 2 cars. The daily, and the cheap fun car. There's tons of great depreciated stuff out there, have fun for a year or two and sell it for as much as you bought it for. Miatas, s2000, c4/c5 Corvettes, ls1 Camaros, TJ wranglers... No matter what you like, there is awesome stuff out there for cheap, and you don't need it to run all the time

[@KingVegeta90]

tommieboi707 i see it as an expense rather then investment. I finished college driving my beater and I’m honestly tired of it. At this point I just a want a nice car that brings me me happiness lol. I’ve fixed all my cars my self learning through KZbin and forums and have managed to save a a decent amount of money the last years few years. I study finance in school and I’m all about the numbers but sometimes you gotta indulge a little.

[@parkerhardy8398]

Bought a 40k vehicle. 6k down payment. I make 6k a month. I spend 2k in living expenses monthly. The rest of the 4k is going to be added as a principle payment at the end of each month plus a 10k principle pay down coming mid 2021. Hoping to pay off this 40k 4Runner in 1 year. Wish me luck! 🤞🏼🤞🏼 Edit: One year later, March 2022 and we just made our last payment! Awesome feeling.

[@parkerhardy8398]

Oh also on a 75 month term. 4.5% apr.

[@parkerhardy8398]

@I. S yeah I’ve thought about refinancing if we take longer than a year to pay off. As of now we are on track to pay it off by March 2022. And absolutely! New Toyota, hoping to drive this thing till it’s dying day. We’ll be using it for business as well. If we didn’t plan on paying it off quickly we wouldn’t have made quite a purchase as this because yeah 40k was a bit scary when we were considering it.

[@MichaelDeLaRosa]

This videos is a sign, I was really about to finance my dream corvette today. But I know it’s not the smartest decision lol. Man I really hope this delayed gratification pans out well, the car was so nice!!!! Think I’m just gunna get a pickup for my lawn business.

[@LivePlayWatchPixels]

I love how Marko knows he's gonna get trolled LOL.. This channel by the way is a GOLD, I am learning so much i just wish i knew about it like 3 years ago

[@greymane2090]

I apologize if someone else has already said this. I liked the video and do not disagree with anything Marco said only to comment that if you invest every few years in a $10,000 used vehicle and invest the other 12,000 in his example your money is making money for you and you have the satisfaction of knowing that you have enough money to continue this for X number of years forward or opt at your discretion for a new vehicle in cash. The power of choice. While you were considering this over X years a sound investment would have also been adding to that $12,000 each year in a compound fashion.

[@blairmillward8408]

The only thing people should finance is a house. If you can't buy anything else outright, you can't afford it - that's my rule. And yes, I own a $9000 used Toyota 😅 paid cash outright.

[@bradw6413]

I have tried to teach this to my high school kids last couple years. It’s crazy how students grades almost 100% reflect your teaching on car buying. Lower grades are kids that will live pay check to paycheck.

[@BlueCollarTrash1]

Lmao I had my sophomore geometry teacher tell me the same thing when I was flunking his class…. Now I make more in 3 months of work building America than he does all year 😂. School an grades an everything to do with high school has failed this country’s youth for decades.

[@flom1951]

Buying a new car is useless if you are not rich. Its value decrease way too fast. Don't spend too much in a liability ! Instead buy a nice used car or accept a leasing. Your car expenses should never be over 20% of you salary if you are single with no kids. And never be over 15% if you have a family.

[@invisiblebuffalo4382]

Excellent advice, with the 20/4/10 rule. But I love the idea of saving up over a few years to get a better car in the future.. Thanks Marko

[@MisoElEven]

The 10 part of the rule is bs outside of US and western europe though.. For example here in Slovakia if I dont want to completely work my ass off Ill get around 1000€/month netto (not enough experience to get a better pay but thats going to improve with time I guess). That would mean I can pay 100€ monthly for a car :D I would actually turn this rule 180° to something like "counting normal monthly spending and the car you should every month be left with 10% of your monthly income still left for emergencies and/or investment".... Every month Im left with 600-700€ that I can invest or spend, no reason why I wouldnt be able to afford a 300-400€ monthly car payment (+100€ gas and 50€ insurance).

[@DailyElectrician]

great video, thanks

[@dcrane4]

I say spend your money however you want.

[@AlanChambers]

Boy, I wish I found this channel back in February. I bought a 2010 Chevrolet Equinox with 212,000 miles at the time from a local automotive shop for $6000. I drove it for 1700 miles and it broke down. It needed a new engine. I should have listened to so many people who said it was a bad deal, but my desperation and misplaced faith and trust in this shop led me to buy this car. The engine cost me $3400. I was without this vehicle for a month and the rental was $882 for the time I didn't have the car. I needed a car because I am a commuter student at a local Bible college that was 15 miles away from me. The credit union didn't trust this car so they would only finance it for two years at $317 per month. Now that I have to pay for the engine, it will cost me probably around $300 per month to get my credit card caught up. So altogether, I am paying between $600-700 per month for a 2010 Equinox with now 214,000 that may be on its last leg. I am looking at another dealership that may be able to help me but now I am distrustful and uncertain if I should take the chance. I would need the new loan to incorporate the remainder of the $3800 on the Equinox plus the payment on the new car. I think I may have to take the chance and ride this Equinox to the point I pay off the loan. I am in a really bad situation with this car.

[@christopherhaynes8633]

This is often one of the things financial gurus don't account for when they recommend to stay away from buying new(er) cars. Of course buying a $40,000 SUV is a poor choice but buying a $15,000 new car with a warranty allows you to calculate the exact cost and estimated resale value if you know how long you will need it for. Old cars are a gamble and can cost you nearly your entire investment. I would recommend you get the car appraised and consider buying a certified pre-owned Nissan Versa or Honda fit that is a few years old and has a few year power train warranty. If they offer you a low price which they probably will, then I'd continue to drive that car, but if there is a major breakdown like a transmission failure then it may make sense to write the car off as a loss and sell it for junk or parts. The plan of buying a used car to save money usually pays off, even in circumstance but when you do all the math it may end up costing $200 a month to drive a 10 year old beater and $300 a month to drive a new econobox. The extra $100 a month is worth the security of knowing major repairs are taken care off such as a $3000 transmission or engine repair. Also you are in a car which is more likely to be safer and more fuel efficient.

[@hankschrader3085]

You don't need this channel to tell you paying $6k for a 212k mile chevy was a bad idea.

[@mikesantos011]

Buy Japanese (toyota/honda) if you’re buying a high mileage used car and have it looked at by a mechanic

[@waltertalbot9472]

The secret is to buy a good car that gives you 0 problems.. buy a Toyota .

[@Canuckplumber83]

Is that you Scotty Kilmer? :)

[@tommieboi707]

@@Canuckplumber83 scotty would just tell you to buy a 94 celica

[@JohnDoe-pf6qp]

I got my start in the industry as a service adviser at a Toyota dealership. If you think Toyota vehicles don't have the same mechanical problems that every other car has you're nuts.

[@ruinunes8251]

Or buy a Honda

[@danread6339]

Every car has problems, every single one. Some just have less 😁

[@jdnrotterdam2150]

So if your salary is like €2000 to 2500 per month than private lease isn’t a option because for a decent car you wil pay €500 -€600 per month ex tanking gas . And financial loan is the same story. So if you in that categorie than save money and buy a decent car cash is te best option

[@itsJoshW]

Okay, this is a video I can get behind. Good job on this one. Literally no misinformation here. Good job!

[@mktbully]

Good video, just don't forget tax that needs to be baked into the equation. Taxes on interest income/cap gain and then tax on the vehicle that you purchase.

[@aileencrane7700]

Yea, I own my car outright and plan to put at LEAST 50% down on my next one, but would prefer to just pay cash for the whole thing. I hate car payments.

[@Flex4LX]

3 years ago I bought my car after watching this video. So happy I only got 1 year left 🚘😎

[@sc3167]

That my current position, buy a reliable used vehicle now like a 16' or 17' Lexus or Acura with low mileage, keep it 10 years, finance the first 5 years through my C.U. and then for the second 5 years term is to save that same payment for the next new "used" car.

[@kkoukos]

One problem I noticed is that in that 10 % you iclude all the gas money, insurance for the car etc. (car expenses ). Yet on the final calculations you dont. Lets take avarage Car Buying Joe with a 60k annual salary -> 5k a month -> 10% of 5k is 500. On avarage a person drives around 15k miles a year or 24k kilometers. Today the gas price is around 1.77 euro per liter of gas or 2 usd per liter of gas. The avarage liter consumption per 100km is 9 , so that would mean that in 24000 kilometers or 15000 miles you would need 240 liter of gas. That would cost you around 425 euro or 480 usd. The avarage insucrance cost per year is 1674 usd. Your total fixed car costs, without taking into consideration taxes and repair costs, annualy would be around 2150 usd. Monthly that would cost you 180 usd meaning that on top of that monthly 458 usd payment you would have to add 180, which brings us to a total of 638 or 12.7% of your income. You also dont take into consideration that with lets say a 25 % tax rate (in my country you would be taxed for around 40% of your income if you made 60k but lets say 25% is a fair amount )your "true" income would be 45k usd or 3750 usd a month, which means that that 638 $ would be 16.8% of your true income. If you were to add the car taxes or all the repairs the car may need you would eventually be able to reach 20% of your true income per month going to the car. I really like what you are doing here with this youtube channel and I dont mean anything bad by this comment, my sole purpose is that you take some more factors into consideration because the general idea is there but when it comes down to executing it, the results wont be the same on paper . Keep up the good work !

[@Andrew83194]

No matter how much you spend on a car it’s always financially best to drive it until the wheels fall off

[@52foreman52]

"What two things stick out you when you look at these numbers?" - That none of my customers are ever going to be in a position to do this.

[@carguy0389]

I’m not doing any type of rule. We have a limited time on this earth and I’m not gonna waste it driving boring cars

[@DB-de6bq]

After retiring from law enforcement ( yep cop ), I bought a small working farm ( cattle & alfalfa ) up here in snow county. I've been kicking around the idea of leasing or financing a new pickup, but way much $. Crazy expensive. So I make do with my 2002 Dodge Durango 4x4 ( had it since new ), & a dual axle trailer when needed. The Durango costs me about $500 to $1,000 in maintenance or repairs per year. A Toyota or Honda wouldn't work for me. Maybe if I lived in the city; but city life..no thanks. Cheers!

[@sethriedel2287]

I have a 2000 Durango thing works like a legend

[@donaldgeorge1166]

This video was amazing and helpful. Just left a dealership without buying after watching your videos. Thanks man!

[@GulyasGuy]

Someone who makes $60,000 does not bring home $5,000 per month. Speaking as someone who makes a “$60,000” salary… i only bring home $3,400. Fun fact.

[@donperrignon]

For the people saying they can't pay cash, why can't you keep your current car, use the money you were willing to spend monthly, and save up? End of video.

[@martinc.720]

Ryan Lewis Older cars have mechanical issues, break down, have higher maintenance cost... you have to fimd the right balance between “I’m saving money by not having a car payment” and “time to walk away from this money pit”

[@donperrignon]

@@martinc.720 Yeah, none of that means you need debt. Few hundred here and there is better than thousands of principal and interest.

[@martinc.720]

Ryan Lewis I had to put a few thousands on an older car in a short amount of time, and I’m still stuck with an older car that may have another nasty surprise in store for me. Is it really worth it?

[@donperrignon]

@@martinc.720 Get a different car. No debt. You can't go through life trying to finance everything. When will you finance your own wealth and not other people's? Real estate debt is one thing, any other is just keeping you in a circle of keeping your pockets empty.

[@martinc.720]

Ryan Lewis I know that, Captain Obvious. But to get a different car, I need money. Not everyone can save enough to purchase a car when they need to. Look, I get it... no debt, no debt, no debt, no debt, no debt... but life does not always go as planned, or one’s situation does not always allow them to follow your mantra.

[@mitch8895]

I bought a 2015 Chevy Sonic for 1000 two years ago hit in the front as a total and fixed it for 1000 just needed bumper covers headlight A fender and a little sub frame work and good as new also went to the wreaking yard and got all leather seats a pioneer touch screen and a roxford fosgate sound system for 500 and now I have a nice first car for 2500

[@KBWGH]

Here man , you can copy and paste the commas

[@gchiriac48]

would love to see where you can buy a $5000 car that wont cost you repair money upfront

[@Soh90]

I actually inadvertently followed this. I bought my car used for $16,000 several years ago. I put $3,000 down and was fortunate enough to pay it off in only 3 years. I didn’t plan on it, but I wanted to get rid of the debt so I worked some extra hours to earn the money. I owned the car a full two years early. Turns out owning a car and not owing a lean lowers your insurance too so I started saving my insurance difference for maintenance costs. Last hear my transmission went out. I used the funds I saved to repair it. $2,500 in total and I had it all saved simply from a maintenance account that I seemingly made up. I’m driving my car to the ground and the next one hopefully I’ll buy as close to all cash as possible. Most people don’t have $10,000 laying around to buy a car cash, and frankly I’m not willing to put my family in a cheaper, older, and less safe car just to save every cent, but I will try to continue to buy used and try to use mostly cash.