My view is pay cash and keep the car for a long time. Get all the value you can out of it, and pass it down to your kids or other family members so they can get value out if it. I'm not into constantly having a car payment, and all the aggravation that goes along with it. I like simplicity.
@Fred Wills I'm willing to take that loss in interest, it's not that much. Save up what you can and pay cash! And don't buy the most expensive car, get modest car and take care of it.
Agreed.....I will add an essential detail to what you said. From the get go, have all the schedule maintenance done at the correct time. It will help in the life of the vehicle and reduce repairs, especially expensive ones. Do all that and drive the car with care. Abusive driving will catch up with you eventually. I speak from experience. I bought a new truck a little over 7 years ago. At 115K miles I had to have the transmission replaced (Not rebuilt)......$5,200 expenses. The two factors were not changing the transmission fluid at all (schedule says change it every 45K miles) & Abusive driving. If I had done the right thing, it would have easily lasted till 300K miles if not more. Educate yourself and life will reward you and you will have less headaches.
It depends...people rent houses, music and films are mostly rented nowadays, you rent WiFi, you rent mobile, you rent insurance, flights, Subway (a ticket is a form of rental: a spot rent if you like as nobody has they money to build a subway for themselves so we rent / pay for what we use - some people use it every day and they normally get a monthly or annual ticket: that is a rent!) utility bills include meter rentals as well, you rent school... if you think about it people rent much more than they think they do and it is ok. As is ok to pay cash for cars as long as the model is not available on 0% finance, for example, in which case you would be throwing money away needlessly. So it depends...
that is crazy. You are saying that you have no better place to put your hard earned capital other than into a depreciating asset. You could put the money into the stock market, mutual funds, even your own mortgage and make money with that money. You are boasting that you make unwise financial decisions because it makes you feel good.
I pay cash too. If you’re not too lazy to research, you can find plenty of auto investments. My last purchase was a Porsche that gain $10,000 in the last 2 years and its a DD.
@@marks6663 and you are going into debt for a depreciating asset, which is worse? If you have the money and can buy the car that is best imo. Investments can do down the drain fast, then you are left with the debt and car whose value that is plummeting plus the interest. Its called being safe and not taking on so much risk for profit. You save to invest or you save to buy. THats just my 2 cents live your life fam.
There is no better feeling than walking into a dealer telling them what you will pay in cash and walking out knowing you own it and exactly what you paid. Also most people including myself take better care of their car.
IF you buy new, make sure you are going to keep the vehicle of a long, long time. Bought a new Honda Civic in 1993 and still own it, 27 years!! A most reliable vehicle.
@@paulbroderick8438 nowadays honda is going downhill on reliabilty, its not the same vehicles 10+yrs ago. 1.5 litre turbo earth dreams engines have oil dilution problems (shorten engine life span). Also, their gas direction Injection needs to be cleaned every 60k miles
Same here have a 2000 Toyota with 600,000 miles just put in a used engine with 80,000 miles ,bought it new in 2000 cash and don’t understand why people buy a new car every so often,if i need to impress io rent a car for 3 days and all is fine
Buy used, pay cash! The borrower is slave to the lender. A brand new car or truck purchase is a terrible choice unless of course you are very wealthy. Just my 2 cents.
@@richramirez1394 I listen to him as well but I roll my eyes when he starts talking about delivering pizzas......... But i do like his mantra on being debt free it has really made our lives easier and way more flexible 👍
Well depends on what type of car but yeah buying a used car u gotta pay cash. And always bring a scan tool with u or a good mechanic with experience. But never buy a used German car always lease it unless it's your project car
He’s admitted his way is not the only way and that sometimes the math on his plan doesn’t always make sense ie debt snowball (more about momentum) and paying cash/investing thousands in a depreciating asset (car) vs investing it a higher earned rate (now prob double.) No one right answer.
@@jmc8076 I think you hit the nail on the head. We're far too eager to take someone else's opinion as an excuse not to think through our own decisions. In cases where you know investments are earning solid gains, it might make sense to purchase a car at low interest. But for a lot of folks, incurring debt for a depreciating purchase (not 'asset') is a bad idea. People need to make the right decision for them based on their situation and their knowledge of their own strengths and tendencies.
Good points! And they make sense from a numbers perspective. Yet I’d rather have less left in savings than have a long term car payment obligations. The interest I pay is secondary to the idea of a large debt burden. In my case, I keep a vehicle for so long there’s no trade in value left anyway.
Pay cash for a car that's under $10K (4-6 years old) that has pretty much lost most of it's value but is still considered a reliable model and has much life left to it. The idea is to keep away from monthly car payments & and high insurance coverage. Keep the rest of your cash in the bank or invest it.
You think buying a car and it losing value (depreciation) is bad? How about making payments and not getting ANY money back, leasing is horrible. Unless you get lucky and get a 0% loan, there’s no reason to finance a new vehicle, just buy the cheapest car that will last 5 years, and during those 5 years, save for a car as if you were making payments. Buy the new car then, then continue to save again. But don’t let the dealer know you’re paying cash until you’ve negotiated the OTD price.
The biggest argument to me for paying cash if possible is that it avoids debt. One example is I paid cash for a new car instead of obligating myself to payments for 3 or more years. A few months later I lost my job and went broke for a while . Many times I was thankful I didn’t have a car payment I had to scrape up during the next couple of lean years, but I had a good reliable car all paid for. Even now, the idea of an extended car payment just scares me. I paid just $5000 cash 3 yrs ago for a Ford Ranger that now has 245,000 miles and has had no major problems and the best vehicle I’ve ever had. I’ll run it until all 4 wheels fall off. It’s just good to avoid big debt when possible simply because debt is bondage. I’d rather be low on cash and debt free, or low debt, than face large payments for years .
This is terrible advice. Leasing is a devil in disguise. And buying new means losing thousands in depreciation. You will pay considerably more in these scenarios. Save up and pay cash.
TJ, my advice comes from years of working with thousands of customers. I agree, if you can afford to pay cash for something, do it. The reality is that most customers can't. That doesn't stop them from wanting a car. I've seen too many folks with negative equity on a long term finance purchases to ever recommend anyone take out a 60, 72, or 84 month loan. When I started in the business in 1977 car loans were 24 months. 24 months! The reason I recommend leasing is because most customers end up wanting to be in the newest, latest, and greatest car within a few years, and leasing gives them that flexibility without burying them in negative equity. I hope this helps provide some context! Thanks for taking the time to watch and comment.
You're both right. If you can't stand to be in a car that's 2-3 years old it's a terrible idea to buy it, as you'll lose more money. On the flip side, if you don't mind driving a car for 8-10 years it's a terrible idea to lease. I personally like to pay cash for cars that are 3-4 years old and drive them until they die. But I'm not upset at the guy that always wants a newer, maintenance free car for himself.
I keep my cars to salvage time. Last new car was end of model, loaded, cash saved 10k. With all this money printing going on don't wait get it while you can.
@@CarEdge I enjoy your vids and appreciate your experience but when I see a car I would like, I take zero advice from the sales person as most of them will say anything to make some comission ( not saying you will) Unfortunately car sales people have the same reputation as politicians, ie they are only in it for what they can get. I would only ever buy second hand, as new cars depreciate too much. I always pay cash and like cars with about 40- 60,000 miles on them but I only buy if it has a full dealership service history. I don't mind higher milage if they are, what we call in the UK, "motorway miles". Over the years I have owned, BMW, Audi, Mercedes, Jaguar and Lexus. I have never been sold a pup, always looked after them, always got a good trade in price when I resold them and never paid more than £12,500 ( don't know what that is in $). The pick of the bunch was the BMW 528i, the worst was the Jaguar XF, it had a myriad of electronic problems that even Jaguar could'nt sort out. Driving a 2015 high milage ( 70,000) Lexus IS300 hybrid at the moment, superb really quick and 64mpg. Will keep for a couple of years then trade in.
I started leasing cars in 2013 when I wanted a car I absolutely couldn't afford and had no business getting into the deal. I was stupid. Due to unfortunate circumstances I had to return that car early and I didn't have money to buy another car, so I leased something much less expensive. The cycle continued until 2020 when I was able to acquire a family member's old car for nothing. For me, leasing wasn't a good deal; I was always paying for something that was never going to belong to me. I'm finally back on solid financial footing, and just to be clear...the whole thing is my responsibility, I'm not blaming anyone for my issues. Some very expensive lessons learned.
Ray, you’re like the dad with sage advice some of us wish we had. I’m just starting my car shopping journey and am taking your videos to heart. Thanks so much for sharing your knowledge - it’s invaluable.
I agree Taah. It’s because they want to make money off of financing the car for you. Pay cash for a 2 year old car with low miles and then make a monthly “car payment” into a savings account. Drive the car for 8-10 years and you will have 45-60k depending on how much you save, and minus car maintenance if you don’t opt for a warranty. Over the years you can invest with the money that comes in. With wise investments that sum could be far greater.
I strongly disagree. It’s this cycle of accepting debt that has got America in the trouble we”re in today. Save up, pay cash, drive until the wheels come off, repeat! That said, I do appreciate your videos. Very informative and helpful. Keep up the good work!
Its worked well for me! Im in the market to replace my car, my wifes car, and buy my daughters first car. I will be paying for them all in cash! Thank God for my financial freedom!
Liz A liz, there’s a saying...”The very definition of insanity is doing the same things over and over again yet expecting a different result”. Those words apply here. Borrowing is essentially living beyond your means. It’s fine to want something nice, as you say, IF...and Only IF....you can afford it. There is no God given inalienable right to luxury. And anything above food, shelter, and water is a luxury. Hell, I want an Lamborghini...but I’m not financially at that stage so I don’t have one. And I certainly am not going to borrow to get it. That would be fiscally irresponsible. People are not “entitled” to anything. If you want more/better....then find a way to to get yourself in a better position to make that happen. Borrowing for immediate gratification is NOT the answer.
@Liz A you also have to consider the original statement. He posed the question as to if you should pay cash for a car or finance it with the condition of one having the cash. Thats the argument.
I would agree on paying cash and if you have to a really short loan of 3yrs or less. Hopefully 1.5 yrs or less! But if you cant pay it completely off by then and or pay cash you cant afford it!! That is why america cant be shut down longer than a week or two look at all the debt rearing its head! Corporate, govt and personal......debt is out of control! Nothing wrong with having something nice as long as you can afford it! And payments doesnt mean you can afford it!! And leasing, jesus that's even worse.......... Go debt free and stop being chained to payments of debt! Nowadays you can get a decent vehicle used and pay cash!!
Paying cash for a car makes perfect sense when you faced with the possibility of losing your job and either continuing to make a car payment or buy food!
I don't get your logic. If you give them your money, they you don't have it. And if you lose your job, then you certainly can't eat the car. And here's the thing: YOU ALWAYS PAY THE LOAN OFF. At any time.
When the salesman asks how you are going to pay for this car; cash, lease, finance over time, keep your mouth shut...tell the salesperson that's something you'll work out with the finance guy once we decide upon a price upon the car. This way, you've got a better chance at receiving ONE price on the car; a price that does NOT depend upon those other factors, because the salesman does not know the other factors. Whether you pay cash, lease, or finance, your choice WILL AFFECT the salesman's price offer on the car to you!
So true. The sales people are programmed to keep asking how you will purchase the car and basically dance around your answer when telling them it all depends. I bought a car last year and I had to tell the sales lady probably 7 times to quit asking me how I’m paying and just give a cash price and we’ll go from there.
I imagine the scenario is where dealer would give you huge discount assuming you'd finance it the normal way vs if you pay cash/promo 0% APR where they most likely won't give you as much discount. Let's you get to a price point so low with the assumption that you might finance it the normal way. Then you go to finance office, don't you think the salesman already inform the finance manager about your "deal"? Then the finance guy quotes you 4.2% then you tell him you're going to pay cash or you want the promo 0% APR, wouldn't you then go back to square 1 and have another negotiation round?
I don’t like leasing because you have to worry about the miles and the condition of the car when you turn it in at the end of the lease , especially if you’re not going to lease another car from the same place.
Usually buy a quality vehicle. Never new, always pre-owned with around 30K miles. Low cost loan with aftermarket repair policy. Then I drive the thing to 200K or more. Keep up the maintenance and it will do fine, it it was quality. Lexus, Acura, Infinity. Daily driver now is 2001 Acura with 208,000. No car payment for 10 years. That's the way...
These days a new car is not that much more than a used with 30k. I would rather not gamble on some one else doing regular maintenance over those 30k. If they knew they were getting rid of it at 30k then why put$ into maintenance?
@@bclamore true that. I kept my maintenance premium on my Civic for 2 years. Then I decided to sell it after 3 year, I just did the bare minimum maintenance for year 3.
I haven't had a car payment in 6 years my 09 Acura TL now has 174,500 miles i paid $17,000 in 2013 every time i think about getting into a car note i get sick to my stomach just thinking about it.
This guy tells the truth. Leasing v buying depends on how long a person intends to keep a car. Most people wouldn't be seen dead in a 5 year old car. Leasing makes sense for them. For me? I don't care. 10 years old? 15 years old? It's all good. I also do my own repairs. For me it's buy for cash.
I pay cash and only buy used cars 3-4 years old. I do this to have control over the dealership. I only visit a dealer for only 30 minutes to pick out the exact car I know that I want. I actually always know what model I want before I go there. I then walk away and bargain over a week or two in the comfort of my own home. They will call me quite regularly. When the price is finally to a point i am willing to pay based on my research I make the deal and tell them to have all the paperwork ready with no add ons and will be there in one hour with bank check for the walk out the door price. Of course they still make money off me but I am satisfied that I didn't get completely screwed.
Bought a used 2019 Toyota Prius Prime cash in a private sale. Clean title and premium package. 14,500 odometer miles. $23,500. Actually $1K more than what a dealer offered the owner.
His reasons are all valid assuming you wanna spend your life shelling out payments. I like a car sinking fund myself. Pay cash for a used Toyota, drive it until the wheels fall off, and with the “payment” you set aside either drive it some more or buy another used one cash from a private party. My tundra has 230k as in typing, I plan to buy the next one cash as well.
Problem with leasing is you are never going to drive a paid off car as long as you are leasing - in the long run leasing ends up being the most expensive way to drive.
The problem with leasing is having to worry about going over the mileage you agree to limit yourself to. Also having to worry about dings and ant other dammage that's not wear and tear. So at the end of your lease, you can still end up paying quite a bit over the leasing amount. When you buy, yes your investment depreciates, but you're buying peace of mind. Besides, Why change a good car you're happy with?
As of right now (2023), everyone's kind of stuck. This video is valid as long as the interest rate is super low but it simply isn't right now. We're talking 7-8% averages. We get the GM employee discount which is supposed to be one of the best discounts in the business and every lease is still ~$250 more for the same vehicle than it was for us 3 years ago which is driving prices close to financing. As leasing makes less sense and is becoming a worse deal and interest rates are absurd, it seems like paying cash (if you have it) is the best way to go. Otherwise, a monthly payment is equivalent to holding your breath until things get better and you are screwed due to interest no matter whether you lease or finance.
Im a 25 year old lady. Ive never bought a car from a dealership. I have no idea what im doing. Im binge watching your videos to learn the most i can. Im super nervous about this process.
The problem with leasing a car is that the leasing system is set up in such a way that it’s counterintuitive to do so. Bubble payments, unrealistic mileage fees…the list goes on. You end up paying as much if not more than you would if you had financed it, because you end up having paid almost as much and are left with absolutely nothing to show for it.
Actually, Zach insisted that I do this and well, I insisted that we appear together so that I could have someone to play off of. This was all Zach's idea and am I ever thankful that he came up with it. All the best, Ray
@@CarEdge totally makes sense. I suspected that at the back of my mind. Great duo combination! He asks all the right questions that a novice like us can think of.
Yes but why not get a heloc at 1% and pay cash to the dealership? Isn't that better then leasing at German rates of 3.99 to 4.99? Then on the heloc only make interest only payments until you sell the car say 2 or 3 yrs later and use the proceeds to pay of the most of the heloc. Thoughts?
I use to get a car loan for three years and when the car was paid off I let my credit union keep taking the monthly payment out and move it to my savings. Then when I needed a new car after 10 or more years I had enough money saved that I could pay more than half the cost of the car. The last car I purchased was a Honda Pilot and I paid cash. I still have it and it runs great. Its 17 years old and has 180,000 miles on it.
I leased when I knew I would not be driving many miles a month...when I lived close to work. I bought when the vehicle was going to be driven on trips and I lived more than 15 miles from work. A few years ago before I retired, I bought, with cash, a vehicle with high mileage and I got what I considered a great deal. It required $2500 in repairs but was still had several thousand less than blue book value into it. Interestingly, I was recently offered $5k more than I paid for it 3 years ago. I'm not selling because I'm very comfortable with it but I never would've realized where the market would be today when I purchased. Needs vs wants.
If I can, I would rather pay cash for a car then finance. Because the car is going to depreciate anyway. The big difference between cash and financing is that you're paying more with financing. Also the stock market is crap right now. I wouldn't trust it.
I pay cash only for used cars. I was buying a nice used Corolla for my daughter and the dealer would not go below $11, 599 OTD. I walked into general mangers office, explained I wanted the car today, and counted out $10,200 in hundreds onto his desk. I said I'm going to pick up the cash from his desk in two minutes and walk out of the dealership unless he wanted to sell me the car right now. I got the car at $10.2K OTD. After all the paperwork was done, the general manager told me he was losing money on the deal...I couldn't stop laughing after hearing this.
The simple economics. You must include opportunity costs when comparing financial strategies. If the cost of borrowing is less than the returns on investing, borrow and invest. This was exactly what my wife and I were discussing yesterday. We are wrapping up a home reno and were deciding what to to do next (pay down mortgage or car loan, college savings for the kids, or retirement contributions). We agreed that since all of our debt is around 3.5% interest, it made more sense to save.
Ray , you get a loan on any car new used you need to factor in the cost of full coverage insurance . Self insurance is the way to go and no loan. Liability is the only insurance you need.
Many good opinions here, all of them can’t fit every persons situation. I look at vehicles differently depending on the situation. Work trucks, just transportation, comfort for long distance travel or something fun and exciting that you plan on never selling. I approach all of those situations differently. I get the whole never buy a depreciating asset thing but just about everything you buy depreciates.
Everything is depreciating. So lease your clothes, lease your phone, lease your laptop, tv, bed, fridge, etc. This is how you end up with nothing but payments as a 70 year old
Good advice HOWEVER.lol... I still do prefer "to owe no man nothing" Having no debt is a nice feeling. Well worth any financial lost due to a few dollars less invested. IMHO Have a great day and tell Zack hi
From a business perspective, what you say makes sense and is excellent advice. However, paying cash for a car that you like, and that you know you're going to keep longterm, gives you a peace of mind that goes beyond financial asset gain. I think with this COVID-19 economic mess about to kick in, that peace of mind has more merit than ever. ✌
I often wonder how many people that have 20K to spend on a car are really that economically uncertain to begin with. Also, if you have 20-30 k, put that in the stock market, money market account, etc in 4 years you will have made money whereas if you put that money into a depreciating asset you will have lost that money. If loan is less than %3 and you buy low and the stock averages 5% growth then you've made profit off of that money.
I would save up and pay cash nothing wrong with driving what you can afford! Whether 5k 10k 15k 20k and up it doesnt matter but people need to get away from payments...... Go debt free, yeah in the beginning it's hard but once you start paying everything off and become debt free it is the best feeling in the world!! And it makes life so much easier.👍
Oooh there's no way someone will convince me to take debt or finance or lease a car. No way. I pay cash and we are done the car is mine and I don't have to worry about it getting auctioned when I have repayment problems. Pay cash, close the deal and drive off
Problem with leasing is you have nothing left at the end of the lease. Most expensive way to own a vehicle. Buying 3-4 year old car for cash and keeping it for 5 - 10 years is the best way to go. Let some one else take the depreciation.
Another reason to consider leasing is you only pay sales tax on the monthly lease payment, assuming your state has a sales tax. Oregon world be an exception.
Yes, if avoiding all debt and or following Dave Ramsey - great plan for many esp if just learning about money or in debt. But investing thousands in cash (every $ spent is essentially investing it) for a depreciating asset at low rates vs investing into good funds for a higher (prob >double) earned rate of interest makes more sense math wise. Even Dave admits this and many have built wealth while financing or leasing cars.
Hey Ray I have BAD credit an I want to lease a car. I’m retired and living debt-free my score is 560 I have some money saved up what is my best option?
Ultimately the choice of cash vs. debt to buy a car comes down to a few key variables. It would be cool for ya'll to refresh this video in your new format showing people how to work it out for themselves. E.g. how to model TCO and opportunity cost for different vehicles with assumptions about interest rates, RoR on invested capital not used to finance a purchase, resale value, term length, marginal fuel+maintenance+insurance expense, etc.
Here's my take on leasing...Where I live in MA. if you lease a car let's say you put $3,000 down to get the payment that you see on T.V, then you pay sales tax on the value of the car so let's say $1600.00 in sales tax, then you lease the vehicle for 36 months. After 36 months you either buy the vehicle or return it to the dealership and start the whole lease process all over again with a new vehicle, repeating the sales tax payment and the monthly payment all over again. I think your always better off buying and keeping said vehicle for a minimum of 15 years or longer if it still runs good.
I'm a recent fan of YAA. You've helped educate me about the car buying process. Interesting points in this video. But I disagree about not buying the car with cash. The last car I bought, was financing for 4 years back in 1999. It was a Ford Mustang GT. Fun car. It still runs. It's gotten more and more eccentric over the years. I've been fortunate to been able to save up some money for a new car. I put in an order with my Subaru dealership, to Subaru. They are making the car I ordered. But it will take about 3 months until it arrives. Assuming I enjoy this car as much as the Mustang, then I may keep it for another 10 to 20 years.
Over the last 20 years the more expensive cars that i bought for fun, Buick, Cadillac, Lexus, Benz, and Vettes I bought used, had fun for a few years and sold at a small loss. The cars that I bought for reliable transportation, Subaru, Toyota, and Hondas I bought new and still own all. I paid cash for the used ones (although in my younger days I was forced to finance used cars at high interest) and financed the new ones. Because of the high interest rates when I was younger I always tried to pay off a mortgage or car loan as soon as I could. Cars within a year, mortgage within ten. Even with interest rates low now I still can't break that habit. The last new car I bought the price was the same either way for cash or .9% loan. I was leaning toward the loan when I was told I could get another $1800 off if I took the 3.5% loan option with their bank. I took that loan, they came down another $1800 and I paid it off in 60 days. My timing has always been off. In the 70's, 80's, and 90's when I was raising a family and, like many, had a mortgage and car loan the interest rates were often double digit and sometimes at record highs, but there was little choice but to pay it. In this century i have managed to finally save a little and so what happens? Rates have been at record lows. Oh well, I'm not the only one.
I love that comment........never ever lease vehicle and if you finance a vehicle make sure its a car in demand to recoup your depreciation lose and only to 3 t0 4 years finance.
I paid cash for my last 3 vehicles. Researched like crazy. Inspections galore presell. Drove modestly and the cars still broke down because these cars are toast once they get to affordable cash prices. Finance a 4-7 year old car and pay it off early. Too many clunkers, liars and hustlers out here selling bullshit cars.
This is such an interesting topic, it’s nice to own something outright but I totally get the fact about putting your money into an asset that basically loses money the minute you drive it off the lot is not a great idea (buying something cash).
I bought a new 2016 Honda HRV in September of 2015. I paid $21500. It is paid in full. All mine. No one can take it from me. I own it. I get offers to buy it all the time for $15000. That means it has depreciated just over $1200 a year for 5 years. I'll take that any day over a lease.
Buy used, preferably private party, have a known good mechanic inspect the car, PAY CASH. The notion that your money will earn a better return in the stock market is NOT VALID as not having a loan is the equivalent of a risk free rate of return, whereas the potential stock market return is high risk.
Definitely a good point. However - For more than 2 years in the USA, always bought for cash and sold after around half a year for a higher price. But these are cars under 7k, and I can’t afford more expensive cars yet. Also since I’m new to the USA, I don’t get good finance rates, even with 700+ credit score.
I drive 120 miles a day 5 days a week. I can’t lease. I must buy. Question: I have cash. I want to buy car outright. One dealer said if I pay cash I’ll be penalized and end up paying $700 more. Whereas if I financed, I’d avoid such a fee. Is that a dealer scam?
Paying cash is always best, and keep it and drive it. If you had a payment of 350 dollars but paid cash make the 350 dollar payment that you would have had and pay it every month to YOURSELF.
Dude this is what I’m thinking. Just bought a car for 31500.00 brand new and I was gonna put 10k down and finance the 21500.00 but I have the cash available why the headache. I’ll just pay 500 a month to myself instead paying interest. Not planning to invest it.
Ray I am on social security, I did work partime and was laid off for a year now. saved. I like to get a good use car I like to get a long for part of it. However on social security dont think I can get a small loan I am getting unemployment I been saving that money to buy a use car (my last car). I have 18000. saved I like to keep some of it. Where would be a good place for me to check on a small loan
I agreed to a 4 year deal on a above my own means Golf 20 plate which was new at the time on £330 monthly payments. I couldn't wait to trade it in. After a while I became frustrated with it; the initial excitement of a new and nice car faded and it was my biggest expense. I was worried about causing damage to it for when I returned it back and I was annoyed at myself for not looking after it properly knowing the amount I was paying. Now I got a £8000 bank loan and bought an 18 plate reliable middle of the road vehicle that I will eventually own. I pay a fraction of repayments and I feel much more free. I still struggle to look after it as I should in terms of outward appearance but I am much more concerned with making sure the tyres are okay, engine oil etc etc and I can, if I want, learn about the car, change the tyres, try new things and such without worrying about voiding something because it is my car (technically). I will eventually own the vehicle and hopefully will be in a position that I will have no more monthly payments and will have a reliable runner. No debt and some profit (minus servicing, insurance and road tax including potential repair fees). Unless your really into cars or can really afford it; don't lease. My goal in life is to own two cars before or relatively quickly into agreeing my biggest debt that unfortunately most people run into; a mortgage. Afterward, I will work my hardest to pay it off as quickly as possible. I also only do 30 day SIM contracts. Obviously there are other stuff you can't get away from been tied to a 'contract' but that's life -- it's never good to look too deep into things like this. 😃 Happy buying! Or leasing!
A lease makes no sense if you put a lot of miles on the car every year, the excess mileage fees ( usually a dollar for every 5-7 miles) can be huge, plus at the end of the lease you have no more car, have to go the entire shopping process again and have to come up with a new deposit. Has he talked about buying the car after the lease is over, is that a good deal?
What he is saying has merit if you're going to buy a new car. But nobody should buy a new car unless you have more money than you know what to do with. I buy used and cheap. Never paid more than 11k for a car and that was 22 years ago. I have a 26 year old miata and a 16 yo Prius. They look good and run great. $600 a year insurance and $130 a year in taxes. I drive about 1k miles/mo and spend less than $60/mo on gas. They are both reliable cars so I have minimal maintenance costs. My last new car I bought 21 years ago.
@@CarEdge how u doing sir i would like to make money in this industry , could you give me some tips on how I can do so Please & have u heard of a website by the name of beforward selling used cars is it legit God bless you for the time i will keep u in my prayers Amen u can reach me on my. e-mail boxingfamily101@gmail.com
Then most people worldwide can't afford things, but yet they still want what they can't afford so that is where credit comes in to help drive the consumer economy.
@@didafm many need it today. Not about want. The wealthy borrow money and keep their cash. Pay it off early and borrow more money. They make money on their debt.
Everyone has a different perspective- not only with cars- but just life in general when it comes to what they do with their money. If you consider all the different people in your life right now- you’ll notice you have savers, buyers, and others kind of in between. Since my first car in 2002, I have purchased two others, totaling three cars in in about 18 years. I paid cash for my first- a used Subaru Legacy, and financed the other two. Drove the first two into the ground and now currently in my second year of the third purchase. I’ve been happy with my personal way of spending my hard earned cash in cars but on the flip side I have friends who make a ton more capital than me who enjoy to lease their cars and they seem to do fine with that way of spending. I guess the end game is that there’s no perfect answer to any of this. It’s not necessarily terrible advice to encourage leasing because it does work for some and vice versa.
Pay the maximum amount on a mileage or point earning credit card that the dealership will allow.... usually $1500-$2500 and the balance in cash... for a solid used/ off lease low mileage car. Lexus or comparable. Pay the credit card off with your next monthly statement.
Don’t buy any car that you couldn’t pay cash for. If you can invest the money at a higher rate than you’d pay to borrow it, do that. Otherwise pay cash.
From a strictly math point of view, you are correct, you can finance a car at 2.9% and invest in the stock market and make more than 2.9% (hopefully). But there are two things the “math” doesn’t discuss, Risk and Peace of Mind. There is a risk that something may happen over a five year car note that makes it more difficult or impossible to pay that $500 a month payment. And there is peace of mind in the knowledge that, if you paid cash, you own that car. It can’t be taken from you if you get downsized or have medical issues. Each person decides what risk and peace of mind are worth.
Lease companies aren't stupid: They do the math because they lease you something which depreciates in time, let you pay for the interest, the depreciating part, and are able to make a profit from it.
A lot of people are bashing Rays advice in the comments below. In my opinion depends on the car and brand you want in your driveway. If you are a flashy person who likes to drive a status symbol to work than lease is your best bet because people like that will get bored of their car in 3 years and wants to upgrade so this way a lease you get the latest and newest and don't have to worry about upside loans when trading in. Not the best way to own a car but so is not buying 100$ t-shirts. Buy new can be tricky if you don't finance with the right terms and good interest rate for under 3 years never ever buy more than 36 months and make sure the brand you buy new will hold value you know which ones. If you are going to buy used go private and get it checked out thoroughly by a professional you trust even if it cost 100$ and you find out its no good better to waste 100$ than 10-15k. The people who say only pay cash and buy a reliable car and drive it until the wheels fall off are basically only going to buy Civics and Corollas and not everyone wants a small car forever so to speak. My advice never walk into a dealer/stealership and do not get your car serviced there unless basic maintenance usually since they are done all the time the cost is fair to market. Pay cash or get loan thru your bank to private prior to sell have a expert check it out and get a unbiased opinion and take care of the car and when you need to move on sell private. This way you save on both fronts and if your lucky sometimes you can get away driving a car for years and only taking off 40% of your initial investment. So for example you buy a car private for 15k cash/loan for a 3-4 years old model under 40k mileage and you drive it for 5-6 years now your 10 yr car now has 120-160k mileage is worth 7- 9k if still in good shape so you as a buyer you spent not including maintenance because everyone has it to drive 20k miles a year hopefully trouble free at under 2k a year in deprecation cost is going to make you and your wallet very happy. Be safe. Thank you Ray for your no hard sales approach videos.
I have always paid cash for cars (new or used) with ONE exception. CD interest rates were at 6%. We were offered 0% financing for 2 years (BTW, $999.18 a month payment on a $24K vehicle). It worked out that over the 2 years the money averaged (remember you are losing it slowly) about $600 in earned interest. I just like the fact of owning something. Also, I don't like the gimmicks of lease return mark-ups, "Oh, the (fill in the blank) needs replacing." I drive a 20 year old 2000 Mazda Protege. $1,900 in 2010 but the state smog buy back paid $1,000 of that for my old car. Thus, a $900 car. I just passed smog and now look forward to getting at least 11 years out of the car. For nearly 30 years my "daily drivers" have been a break even deal once the cars are disposed of (state buy back, cars parted out etc.). I can't fathom people who pay $300+ a month - FOR LIFE!
I'm going to say no to lease if you daily drive it. Drive a lot. Long distance. Due to milage overage. Could cost you tons to turn it back in at end of lease. Sister in-law always leased and ended up costing her over 7k at end of lease due to miles over. She changed her views and bought her next car.
when you finance with the dealer, the dealer gets a kick back on the loan because they get a lower rate then we do. so the dealer wants you to finance with them . Yes?
leasing is for suckers: the customer pays for most of the depreciation of the vehicle. on financing: the dealer gets back points from the lender, like a mortgage deal.
you buy , you own something at the end, you lease, you get nothing for all your money. and leases charge by mileage. so if you drive alot, like me 15k per year. better off to buy, and hold of to for 8 or more years....
That was very interesting.my friend needs a car, she is looking at LEXUS RX 350 2009 as a student. intend to do security loan. Is supposed be $5000.- 7000.00 what d you think ? pay cash or the SECURITY LOAN.? her credit is AVERAGE she was told.SECONDLY RX 450 LEXUS 2010 or refinance with a dealer? please reply.
Only problem I see with Leasing, is the fact that its actually renting but with a more subtle word like "leasing". With that being said, what's the real point of leasing/renting for so many years? That's the question I want answered. Is it really financially smart to be leasing/renting cars all your life? Because by common sense, that doesn't sound good. Please get me out of my confusion here. Thank you.
Find a used car with 5000 to 15000 miles or less miles, with a warranty still active and pay cash!! Why give the bank thousands in interest if you have the cash at hand, save up and buy. If you can pay cash your probably wise with money and dont have to worry about a high credit score.
@@potterylady44 not neccesarily, if you avoid dealerships. Buy independent seller, regular joe, trying to sell. Yes pay cash. Although if you do go dealer, dont say you will pay cash until final price is agreed upon!
Enjoy yr channel. I keep cars 12 to 15 yrs so leasing not an option. Also I buy used cars so I'm not hit losing thousands driving it off lot. What u say makes sense if u want to drive new cars. Ad u say cars not an investment.
Hey Ray, Ray here. You do a great job explaining things in these videos. I've been selling cars for over 10 years and have made a good living at it by being honest and upfront with my customers. Customers who watch your videos are probably more prepared and will probably have a more pleasant experience once they do the transaction.
People who watch these videos will get taken to the bank. He is talking as a salesman or manager. He does not give any helpful info for buyers. I feel bad for the people who thinks that he is helping out.
My view is pay cash and keep the car for a long time. Get all the value you can out of it, and pass it down to your kids or other family members so they can get value out if it. I'm not into constantly having a car payment, and all the aggravation that goes along with it. I like simplicity.
@Fred Wills I'm willing to take that loss in interest, it's not that much. Save up what you can and pay cash! And don't buy the most expensive car, get modest car and take care of it.
@@moonbeamskies3346 perfect comment. 👍
For me buy in cash is "Owning" other than that it's not yours it's the banks!
Agreed.....I will add an essential detail to what you said.
From the get go, have all the schedule maintenance done at the correct time. It will help in the life of the vehicle and reduce repairs, especially expensive ones. Do all that and drive the car with care. Abusive driving will catch up with you eventually. I speak from experience. I bought a new truck a little over 7 years ago. At 115K miles I had to have the transmission replaced (Not rebuilt)......$5,200 expenses. The two factors were not changing the transmission fluid at all (schedule says change it every 45K miles) & Abusive driving.
If I had done the right thing, it would have easily lasted till 300K miles if not more.
Educate yourself and life will reward you and you will have less headaches.
The current economy is exactly why having no debt is good
Exactly, when the tide goes out, you see who is swimming naked..
And a 6-9 month emergency fund.
Dave Ramsey on You Tube was right
Warren Trout amen to that
The borrower is slave to the lender
i pay cash for my cars...i like to own my things rather than pretend i own them
It depends...people rent houses, music and films are mostly rented nowadays, you rent WiFi, you rent mobile, you rent insurance, flights, Subway (a ticket is a form of rental: a spot rent if you like as nobody has they money to build a subway for themselves so we rent / pay for what we use - some people use it every day and they normally get a monthly or annual ticket: that is a rent!) utility bills include meter rentals as well, you rent school... if you think about it people rent much more than they think they do and it is ok. As is ok to pay cash for cars as long as the model is not available on 0% finance, for example, in which case you would be throwing money away needlessly. So it depends...
@@sixpotshot and if I could, I would buy them. Renting WiFi is unethically expensive.
that is crazy. You are saying that you have no better place to put your hard earned capital other than into a depreciating asset. You could put the money into the stock market, mutual funds, even your own mortgage and make money with that money. You are boasting that you make unwise financial decisions because it makes you feel good.
I pay cash too. If you’re not too lazy to research, you can find plenty of auto investments. My last purchase was a Porsche that gain $10,000 in the last 2 years and its a DD.
@@marks6663 and you are going into debt for a depreciating asset, which is worse? If you have the money and can buy the car that is best imo. Investments can do down the drain fast, then you are left with the debt and car whose value that is plummeting plus the interest. Its called being safe and not taking on so much risk for profit. You save to invest or you save to buy. THats just my 2 cents live your life fam.
There is no better feeling than walking into a dealer telling them what you will pay in cash and walking out knowing you own it and exactly what you paid. Also most people including myself take better care of their car.
Worst thing you can do is still a dealer you are paying cash loool what a moron
I agree with you
IF you buy new, make sure you are going to keep the vehicle of a long, long time. Bought a new Honda Civic in 1993 and still own it, 27 years!! A most reliable vehicle.
Wow Paul. 27 years 👍
My wife still drives her first car - Toyota Corolla 1992...
@@howardrees9278 Yep, Honda and Toyota! I always keep on top of the repairs.
Honda lost a lot of money on you!
@@paulbroderick8438 nowadays honda is going downhill on reliabilty, its not the same vehicles 10+yrs ago. 1.5 litre turbo earth dreams engines have oil dilution problems (shorten engine life span). Also, their gas direction Injection needs to be cleaned every 60k miles
Never had a car payment in my life. Driving an 18 year old car with 400k km. Don't need to impress anybody
Good for you. Stay safe, Ray
Same here have a 2000 Toyota with 600,000 miles just put in a used engine with 80,000 miles ,bought it new in 2000 cash and don’t understand why people buy a new car every so often,if i need to impress io rent a car for 3 days and all is fine
It works for me.
“Dont need to impress anybody” Except maybe trying to impress the people of UA-cam with your financial decisions.
@@TheScottAF are you impressed?
Buy used, pay cash! The borrower is slave to the lender. A brand new car or truck purchase is a terrible choice unless of course you are very wealthy. Just my 2 cents.
Truth!
@@richramirez1394 👍👍
Gatorman👍. You are right. Even a used vehicle
@@richramirez1394 I listen to him as well but I roll my eyes when he starts talking about delivering pizzas.........
But i do like his mantra on being debt free it has really made our lives easier and way more flexible 👍
Well depends on what type of car but yeah buying a used car u gotta pay cash. And always bring a scan tool with u or a good mechanic with experience. But never buy a used German car always lease it unless it's your project car
Dave Ramsey just had a stroke.
I had the same reaction to this crap.
Lol exactly!!!!
Say it again
He’s admitted his way is not the only way and that sometimes the math on his plan doesn’t always make sense ie debt snowball (more about momentum) and paying cash/investing thousands in a depreciating asset (car) vs investing it a higher earned rate (now prob double.) No one right answer.
@@jmc8076 I think you hit the nail on the head. We're far too eager to take someone else's opinion as an excuse not to think through our own decisions. In cases where you know investments are earning solid gains, it might make sense to purchase a car at low interest. But for a lot of folks, incurring debt for a depreciating purchase (not 'asset') is a bad idea. People need to make the right decision for them based on their situation and their knowledge of their own strengths and tendencies.
When this video was made it was not a bad advice. But now in nearly 2023 I think it needs an update
Good points! And they make sense from a numbers perspective. Yet I’d rather have less left in savings than have a long term car payment obligations. The interest I pay is secondary to the idea of a large debt burden. In my case, I keep a vehicle for so long there’s no trade in value left anyway.
I love what you and your son do but a cash buy is the way to go for so many good reasons.
Sorry but I don't agree with Ray on this one for me cash buying is the way to go.
Pay cash for a car that's under $10K (4-6 years old) that has pretty much lost most of it's value but is still considered a reliable model and has much life left to it. The idea is to keep away from monthly car payments & and high insurance coverage. Keep the rest of your cash in the bank or invest it.
You think buying a car and it losing value (depreciation) is bad? How about making payments and not getting ANY money back, leasing is horrible.
Unless you get lucky and get a 0% loan, there’s no reason to finance a new vehicle, just buy the cheapest car that will last 5 years, and during those 5 years, save for a car as if you were making payments. Buy the new car then, then continue to save again. But don’t let the dealer know you’re paying cash until you’ve negotiated the OTD price.
Leasing = permanent car payment.
The biggest argument to me for paying cash if possible is that it avoids debt. One example is I paid cash for a new car instead of obligating myself to payments for 3 or more years. A few months later I lost my job and went broke for a while . Many times I was thankful I didn’t have a car payment I had to scrape up during the next couple of lean years, but I had a good reliable car all paid for. Even now, the idea of an extended car payment just scares me. I paid just $5000 cash 3 yrs ago for a Ford Ranger that now has 245,000 miles and has had no
major problems and the best vehicle I’ve ever had. I’ll run it until all 4 wheels fall off. It’s just good to avoid big debt when possible simply because debt is bondage. I’d rather be low on cash and debt free, or low debt, than face large payments for years .
Financing is better if you know how to use cash to buy assets
This is terrible advice. Leasing is a devil in disguise. And buying new means losing thousands in depreciation. You will pay considerably more in these scenarios. Save up and pay cash.
TJ, my advice comes from years of working with thousands of customers. I agree, if you can afford to pay cash for something, do it. The reality is that most customers can't. That doesn't stop them from wanting a car. I've seen too many folks with negative equity on a long term finance purchases to ever recommend anyone take out a 60, 72, or 84 month loan. When I started in the business in 1977 car loans were 24 months. 24 months! The reason I recommend leasing is because most customers end up wanting to be in the newest, latest, and greatest car within a few years, and leasing gives them that flexibility without burying them in negative equity. I hope this helps provide some context! Thanks for taking the time to watch and comment.
You're both right. If you can't stand to be in a car that's 2-3 years old it's a terrible idea to buy it, as you'll lose more money. On the flip side, if you don't mind driving a car for 8-10 years it's a terrible idea to lease. I personally like to pay cash for cars that are 3-4 years old and drive them until they die. But I'm not upset at the guy that always wants a newer, maintenance free car for himself.
I keep my cars to salvage time. Last new car was end of model, loaded, cash saved 10k. With all this money printing going on don't wait get it while you can.
@@CarEdge I enjoy your vids and appreciate your experience but when I see a car I would like, I take zero advice from the sales person as most of them will say anything to make some comission ( not saying you will) Unfortunately car sales people have the same reputation as politicians, ie they are only in it for what they can get. I would only ever buy second hand, as new cars depreciate too much. I always pay cash and like cars with about 40- 60,000 miles on them but I only buy if it has a full dealership service history. I don't mind higher milage if they are, what we call in the UK, "motorway miles". Over the years I have owned, BMW, Audi, Mercedes, Jaguar and Lexus. I have never been sold a pup, always looked after them, always got a good trade in price when I resold them and never paid more than £12,500 ( don't know what that is in $). The pick of the bunch was the BMW 528i, the worst was the Jaguar XF, it had a myriad of electronic problems that even Jaguar could'nt sort out. Driving a 2015 high milage ( 70,000) Lexus IS300 hybrid at the moment, superb really quick and 64mpg. Will keep for a couple of years then trade in.
Anyone who switched to the latest and greatest car every few years is so financially irresponsible. With that being said, humans will be human.
I started leasing cars in 2013 when I wanted a car I absolutely couldn't afford and had no business getting into the deal. I was stupid. Due to unfortunate circumstances I had to return that car early and I didn't have money to buy another car, so I leased something much less expensive. The cycle continued until 2020 when I was able to acquire a family member's old car for nothing. For me, leasing wasn't a good deal; I was always paying for something that was never going to belong to me. I'm finally back on solid financial footing, and just to be clear...the whole thing is my responsibility, I'm not blaming anyone for my issues.
Some very expensive lessons learned.
Dave Ramsey is right when he says leasing is just a fancy word for “renting.” He also calls it “fleecing a car.”
Ray, you’re like the dad with sage advice some of us wish we had. I’m just starting my car shopping journey and am taking your videos to heart. Thanks so much for sharing your knowledge - it’s invaluable.
It is my absolute pleasure and the driving force in my life. Thanks for watching. Ray
Except this advice will cost your thousands.
It's concerning that someone would be so apposed to a customer paying cash.
I agree Taah. It’s because they want to make money off of financing the car for you.
Pay cash for a 2 year old car with low miles and then make a monthly “car payment” into a savings account. Drive the car for 8-10 years and you will have 45-60k depending on how much you save, and minus car maintenance if you don’t opt for a warranty. Over the years you can invest with the money that comes in. With wise investments that sum could be far greater.
I strongly disagree. It’s this cycle of accepting debt that has got America in the trouble we”re in today. Save up, pay cash, drive until the wheels come off, repeat!
That said, I do appreciate your videos. Very informative and helpful. Keep up the good work!
Its worked well for me!
Im in the market to replace my car, my wifes car, and buy my daughters first car. I will be paying for them all in cash! Thank God for my financial freedom!
Liz A liz, there’s a saying...”The very definition of insanity is doing the same things over and over again yet expecting a different result”. Those words apply here. Borrowing is essentially living beyond your means. It’s fine to want something nice, as you say, IF...and Only IF....you can afford it. There is no God given inalienable right to luxury. And anything above food, shelter, and water is a luxury. Hell, I want an Lamborghini...but I’m not financially at that stage so I don’t have one. And I certainly am not going to borrow to get it. That would be fiscally irresponsible. People are not “entitled” to anything. If you want more/better....then find a way to to get yourself in a better position to make that happen. Borrowing for immediate gratification is NOT the answer.
@Liz A you also have to consider the original statement. He posed the question as to if you should pay cash for a car or finance it with the condition of one having the cash. Thats the argument.
I would agree on paying cash and if you have to a really short loan of 3yrs or less. Hopefully 1.5 yrs or less! But if you cant pay it completely off by then and or pay cash you cant afford it!! That is why america cant be shut down longer than a week or two look at all the debt rearing its head! Corporate, govt and personal......debt is out of control!
Nothing wrong with having something nice as long as you can afford it! And payments doesnt mean you can afford it!!
And leasing, jesus that's even worse..........
Go debt free and stop being chained to payments of debt!
Nowadays you can get a decent vehicle used and pay cash!!
@@thinktankindi2664 yep you go it's the best feeling in the world!!!!👍
I just paid cash for my new SUV. Make no sense to take a loan when you have the cash to pay for it.
Paying cash for a car makes perfect sense when you faced with the possibility of losing your job and either continuing to make a car payment or buy food!
I don't get your logic. If you give them your money, they you don't have it. And if you lose your job, then you certainly can't eat the car. And here's the thing: YOU ALWAYS PAY THE LOAN OFF. At any time.
When the salesman asks how you are going to pay for this car; cash, lease, finance over time, keep your mouth shut...tell the salesperson that's something you'll work out with the finance guy once we decide upon a price upon the car. This way, you've got a better chance at receiving ONE price on the car; a price that does NOT depend upon those other factors, because the salesman does not know the other factors. Whether you pay cash, lease, or finance, your choice WILL AFFECT the salesman's price offer on the car to you!
So true. The sales people are programmed to keep asking how you will purchase the car and basically dance around your answer when telling them it all depends. I bought a car last year and I had to tell the sales lady probably 7 times to quit asking me how I’m paying and just give a cash price and we’ll go from there.
Archie; you watched that Kevin Hunter video too!
This is 100% the truth. Just say you’ll discuss with the finance manager.
I imagine the scenario is where dealer would give you huge discount assuming you'd finance it the normal way vs if you pay cash/promo 0% APR where they most likely won't give you as much discount.
Let's you get to a price point so low with the assumption that you might finance it the normal way. Then you go to finance office, don't you think the salesman already inform the finance manager about your "deal"? Then the finance guy quotes you 4.2% then you tell him you're going to pay cash or you want the promo 0% APR, wouldn't you then go back to square 1 and have another negotiation round?
I don’t like leasing because you have to worry about the miles and the condition of the car when you turn it in at the end of the lease , especially if you’re not going to lease another car from the same place.
I'm 15 and about to get my first car at 16 and don't wanna worry about car payments so naturally a cash car sounds better. Whats yalls opinions?
Usually buy a quality vehicle. Never new, always pre-owned with around 30K miles. Low cost loan with aftermarket repair policy. Then I drive the thing to 200K or more. Keep up the maintenance and it will do fine, it it was quality. Lexus, Acura, Infinity. Daily driver now is 2001 Acura with 208,000. No car payment for 10 years. That's the way...
I thought the interest is always generally higher on used cars? Unless you referring to the lower principle loan amount.
These days a new car is not that much more than a used with 30k. I would rather not gamble on some one else doing regular maintenance over those 30k. If they knew they were getting rid of it at 30k then why put$ into maintenance?
@@bclamore true that. I kept my maintenance premium on my Civic for 2 years. Then I decided to sell it after 3 year, I just did the bare minimum maintenance for year 3.
I haven't had a car payment in 6 years my 09 Acura TL now has 174,500 miles i paid $17,000 in 2013 every time i think about getting into a car note i get sick to my stomach just thinking about it.
This guy tells the truth. Leasing v buying depends on how long a person intends to keep a car. Most people wouldn't be seen dead in a 5 year old car. Leasing makes sense for them. For me? I don't care. 10 years old? 15 years old? It's all good. I also do my own repairs. For me it's buy for cash.
I pay cash and only buy used cars 3-4 years old. I do this to have control over the dealership. I only visit a dealer for only 30 minutes to pick out the exact car I know that I want. I actually always know what model I want before I go there. I then walk away and bargain over a week or two in the comfort of my own home. They will call me quite regularly. When the price is finally to a point i am willing to pay based on my research I make the deal and tell them to have all the paperwork ready with no add ons and will be there in one hour with bank check for the walk out the door price. Of course they still make money off me but I am satisfied that I didn't get completely screwed.
Bought a used 2019 Toyota Prius Prime cash in a private sale. Clean title and premium package. 14,500 odometer miles. $23,500. Actually $1K more than what a dealer offered the owner.
I've done this several times. It is a win, win for both parties!
His reasons are all valid assuming you wanna spend your life shelling out payments.
I like a car sinking fund myself.
Pay cash for a used Toyota, drive it until the wheels fall off, and with the “payment” you set aside either drive it some more or buy another used one cash from a private party.
My tundra has 230k as in typing, I plan to buy the next one cash as well.
Problem with leasing is you are never going to drive a paid off car as long as you are leasing - in the long run leasing ends up being the most expensive way to drive.
The problem with leasing is having to worry about going over the mileage you agree to limit yourself to. Also having to worry about dings and ant other dammage that's not wear and tear. So at the end of your lease, you can still end up paying quite a bit over the leasing amount. When you buy, yes your investment depreciates, but you're buying peace of mind. Besides, Why change a good car you're happy with?
As of right now (2023), everyone's kind of stuck. This video is valid as long as the interest rate is super low but it simply isn't right now. We're talking 7-8% averages. We get the GM employee discount which is supposed to be one of the best discounts in the business and every lease is still ~$250 more for the same vehicle than it was for us 3 years ago which is driving prices close to financing. As leasing makes less sense and is becoming a worse deal and interest rates are absurd, it seems like paying cash (if you have it) is the best way to go. Otherwise, a monthly payment is equivalent to holding your breath until things get better and you are screwed due to interest no matter whether you lease or finance.
Im a 25 year old lady. Ive never bought a car from a dealership. I have no idea what im doing. Im binge watching your videos to learn the most i can. Im super nervous about this process.
I am in the same spot. I am trying to buy a car from a dealership. How did your car shopping go?
The problem with leasing a car is that the leasing system is set up in such a way that it’s counterintuitive to do so. Bubble payments, unrealistic mileage fees…the list goes on. You end up paying as much if not more than you would if you had financed it, because you end up having paid almost as much and are left with absolutely nothing to show for it.
Found your first Video, I thought your son started this channel but seems like it was you. Great informative channel, I learned a lot from you.
Actually, Zach insisted that I do this and well, I insisted that we appear together so that I could have someone to play off of. This was all Zach's idea and am I ever thankful that he came up with it. All the best, Ray
@@CarEdge totally makes sense. I suspected that at the back of my mind. Great duo combination! He asks all the right questions that a novice like us can think of.
Yes but why not get a heloc at 1% and pay cash to the dealership? Isn't that better then leasing at German rates of 3.99 to 4.99? Then on the heloc only make interest only payments until you sell the car say 2 or 3 yrs later and use the proceeds to pay of the most of the heloc. Thoughts?
I use to get a car loan for three years and when the car was paid off I let my credit union keep taking the monthly payment out and move it to my savings. Then when I needed a new car after 10 or more years I had enough money saved that I could pay more than half the cost of the car. The last car I purchased was a Honda Pilot and I paid cash. I still have it and it runs great. Its 17 years old and has 180,000 miles on it.
That's a great plan and congratulations for having the discipline to do it. Bravo!
I leased when I knew I would not be driving many miles a month...when I lived close to work. I bought when the vehicle was going to be driven on trips and I lived more than 15 miles from work. A few years ago before I retired, I bought, with cash, a vehicle with high mileage and I got what I considered a great deal. It required $2500 in repairs but was still had several thousand less than blue book value into it. Interestingly, I was recently offered $5k more than I paid for it 3 years ago. I'm not selling because I'm very comfortable with it but I never would've realized where the market would be today when I purchased. Needs vs wants.
If I can, I would rather pay cash for a car then finance. Because the car is going to depreciate anyway. The big difference between cash and financing is that you're paying more with financing. Also the stock market is crap right now. I wouldn't trust it.
I pay cash only for used cars. I was buying a nice used Corolla for my daughter and the dealer would not go below $11, 599 OTD. I walked into general mangers office, explained I wanted the car today, and counted out $10,200 in hundreds onto his desk. I said I'm going to pick up the cash from his desk in two minutes and walk out of the dealership unless he wanted to sell me the car right now. I got the car at $10.2K OTD. After all the paperwork was done, the general manager told me he was losing money on the deal...I couldn't stop laughing after hearing this.
The simple economics. You must include opportunity costs when comparing financial strategies. If the cost of borrowing is less than the returns on investing, borrow and invest.
This was exactly what my wife and I were discussing yesterday. We are wrapping up a home reno and were deciding what to to do next (pay down mortgage or car loan, college savings for the kids, or retirement contributions). We agreed that since all of our debt is around 3.5% interest, it made more sense to save.
Ray , you get a loan on any car new used you need to factor in the cost of full coverage insurance .
Self insurance is the way to go and no loan. Liability is the only insurance you need.
This is something I doubt most people would think of , very good point
Many good opinions here, all of them can’t fit every persons situation.
I look at vehicles differently depending on the situation. Work trucks, just transportation, comfort for long distance travel or something fun and exciting that you plan on never selling. I approach all of those situations differently.
I get the whole never buy a depreciating asset thing but just about everything you buy depreciates.
Everything is depreciating. So lease your clothes, lease your phone, lease your laptop, tv, bed, fridge, etc. This is how you end up with nothing but payments as a 70 year old
Good advice HOWEVER.lol... I still do prefer "to owe no man nothing" Having no debt is a nice feeling. Well worth any financial lost due to a few dollars less invested. IMHO Have a great day and tell Zack hi
From a business perspective, what you say makes sense and is excellent advice. However, paying cash for a car that you like, and that you know you're going to keep longterm, gives you a peace of mind that goes beyond financial asset gain. I think with this COVID-19 economic mess about to kick in, that peace of mind has more merit than ever. ✌
I often wonder how many people that have 20K to spend on a car are really that economically uncertain to begin with. Also, if you have 20-30 k, put that in the stock market, money market account, etc in 4 years you will have made money whereas if you put that money into a depreciating asset you will have lost that money. If loan is less than %3 and you buy low and the stock averages 5% growth then you've made profit off of that money.
I would save up and pay cash nothing wrong with driving what you can afford!
Whether 5k 10k 15k 20k and up it doesnt matter but people need to get away from payments......
Go debt free, yeah in the beginning it's hard but once you start paying everything off and become debt free it is the best feeling in the world!! And it makes life so much easier.👍
@@tinmanslickgreasy999 Agreed 👍 Also people tend to live beyond their means.
Oooh there's no way someone will convince me to take debt or finance or lease a car. No way. I pay cash and we are done the car is mine and I don't have to worry about it getting auctioned when I have repayment problems. Pay cash, close the deal and drive off
Problem with leasing is you have nothing left at the end of the lease. Most expensive way to own a vehicle. Buying 3-4 year old car for cash and keeping it for 5 - 10 years is the best way to go. Let some one else take the depreciation.
Another reason to consider leasing is you only pay sales tax on the monthly lease payment, assuming your state has a sales tax. Oregon world be an exception.
Buy 2 years old, pay cash 👌🏼
Absolutely !
Yes, if avoiding all debt and or following Dave Ramsey - great plan for many esp if just learning about money or in debt. But investing thousands in cash (every $ spent is essentially investing it) for a depreciating asset at low rates vs investing into good funds for a higher (prob >double) earned rate of interest makes more sense math wise. Even Dave admits this and many have built wealth while financing or leasing cars.
@@jmc8076 but what about the requirement to get full insurance if you finance? Going liability only is decent money saved too.
Hey Ray I have BAD credit an I want to lease a car. I’m retired and living debt-free my score is 560 I have some money saved up what is my best option?
Ultimately the choice of cash vs. debt to buy a car comes down to a few key variables. It would be cool for ya'll to refresh this video in your new format showing people how to work it out for themselves. E.g. how to model TCO and opportunity cost for different vehicles with assumptions about interest rates, RoR on invested capital not used to finance a purchase, resale value, term length, marginal fuel+maintenance+insurance expense, etc.
This is a good video. Just one person speaking. No wasted time. Right to the point.
Thank you
People use loans to buy cars that are beyond their means. People using only money they have saved are less likely to make bad decisions.
Your theory is appropriate and logical....if you're not credit challenged like me. We're talking a WHOLE 'nother subject.
Here's my take on leasing...Where I live in MA. if you lease a car let's say you put $3,000 down to get the payment that you see on T.V, then you pay sales tax on the value of the car so let's say $1600.00 in sales tax, then you lease the vehicle for 36 months. After 36 months you either buy the vehicle or return it to the dealership and start the whole lease process all over again with a new vehicle, repeating the sales tax payment and the monthly payment all over again. I think your always better off buying and keeping said vehicle for a minimum of 15 years or longer if it still runs good.
I'm a recent fan of YAA. You've helped educate me about the car buying process. Interesting points in this video. But I disagree about not buying the car with cash. The last car I bought, was financing for 4 years back in 1999. It was a Ford Mustang GT. Fun car. It still runs. It's gotten more and more eccentric over the years. I've been fortunate to been able to save up some money for a new car. I put in an order with my Subaru dealership, to Subaru. They are making the car I ordered. But it will take about 3 months until it arrives. Assuming I enjoy this car as much as the Mustang, then I may keep it for another 10 to 20 years.
Over the last 20 years the more expensive cars that i bought for fun, Buick, Cadillac, Lexus, Benz, and Vettes I bought used, had fun for a few years and sold at a small loss. The cars that I bought for reliable transportation, Subaru, Toyota, and Hondas I bought new and still own all. I paid cash for the used ones (although in my younger days I was forced to finance used cars at high interest) and financed the new ones. Because of the high interest rates when I was younger I always tried to pay off a mortgage or car loan as soon as I could. Cars within a year, mortgage within ten. Even with interest rates low now I still can't break that habit. The last new car I bought the price was the same either way
for cash or .9% loan. I was leaning toward the loan when I was told I could get another $1800 off if I took the 3.5% loan option with their bank. I took that loan, they came down another $1800 and I paid it off in 60 days.
My timing has always been off. In the 70's, 80's, and 90's when I was raising a family and, like many, had a mortgage and car loan the interest rates were often double digit and sometimes at record highs, but there was little choice but to pay it. In this century i have managed to finally save a little and so what happens? Rates have been at record lows. Oh well, I'm not the only one.
If u have enough cash..pay cash....if don’t just go for public transport.
I love that comment........never ever lease vehicle and if you finance a vehicle make sure its a car in demand to recoup your depreciation lose and only to 3 t0 4 years finance.
I paid cash for my last 3 vehicles. Researched like crazy. Inspections galore presell. Drove modestly and the cars still broke down because these cars are toast once they get to affordable cash prices. Finance a 4-7 year old car and pay it off early. Too many clunkers, liars and hustlers out here selling bullshit cars.
Who's here in '22, with no debt? 3 cars and a house and nobody owes a dime; nobody has access to any of the equity but me!
This is such an interesting topic, it’s nice to own something outright but I totally get the fact about putting your money into an asset that basically loses money the minute you drive it off the lot is not a great idea (buying something cash).
I bought a new 2016 Honda HRV in September of 2015. I paid $21500. It is paid in full. All mine. No one can take it from me. I own it. I get offers to buy it all the time for $15000. That means it has depreciated just over $1200 a year for 5 years. I'll take that any day over a lease.
Buy used, preferably private party, have a known good mechanic inspect the car, PAY CASH. The notion that your money will earn a better return in the stock market is NOT VALID as not having a loan is the equivalent of a risk free rate of return, whereas the potential stock market return is high risk.
Definitely a good point. However - For more than 2 years in the USA, always bought for cash and sold after around half a year for a higher price. But these are cars under 7k, and I can’t afford more expensive cars yet. Also since I’m new to the USA, I don’t get good finance rates, even with 700+ credit score.
I drive 120 miles a day 5 days a week. I can’t lease. I must buy. Question: I have cash. I want to buy car outright. One dealer said if I pay cash I’ll be penalized and end up paying $700 more. Whereas if I financed, I’d avoid such a fee. Is that a dealer scam?
Paying cash is always best, and keep it and drive it. If you had a payment of 350 dollars but paid cash make the 350 dollar payment that you would have had and pay it every month to YOURSELF.
Dude this is what I’m thinking. Just bought a car for 31500.00 brand new and I was gonna put 10k down and finance the 21500.00 but I have the cash available why the headache. I’ll just pay 500 a month to myself instead paying interest. Not planning to invest it.
Ray I am on social security, I did work partime and was laid off for a year now. saved. I like to get a good use car I like to get a long for part of it. However on social security dont think I can get a small loan I am getting unemployment I been saving that money to buy a use car (my last car). I have 18000. saved I like to keep some of it. Where would be a good place for me to check on a small loan
Cash is king never ever buy a car on finance noway never especially nowadays u don't know whats going to happen tomorrow be careful ❤️❤️❤️
I agreed to a 4 year deal on a above my own means Golf 20 plate which was new at the time on £330 monthly payments.
I couldn't wait to trade it in. After a while I became frustrated with it; the initial excitement of a new and nice car faded and it was my biggest expense. I was worried about causing damage to it for when I returned it back and I was annoyed at myself for not looking after it properly knowing the amount I was paying.
Now I got a £8000 bank loan and bought an 18 plate reliable middle of the road vehicle that I will eventually own. I pay a fraction of repayments and I feel much more free. I still struggle to look after it as I should in terms of outward appearance but I am much more concerned with making sure the tyres are okay, engine oil etc etc and I can, if I want, learn about the car, change the tyres, try new things and such without worrying about voiding something because it is my car (technically). I will eventually own the vehicle and hopefully will be in a position that I will have no more monthly payments and will have a reliable runner. No debt and some profit (minus servicing, insurance and road tax including potential repair fees).
Unless your really into cars or can really afford it; don't lease.
My goal in life is to own two cars before or relatively quickly into agreeing my biggest debt that unfortunately most people run into; a mortgage. Afterward, I will work my hardest to pay it off as quickly as possible.
I also only do 30 day SIM contracts. Obviously there are other stuff you can't get away from been tied to a 'contract' but that's life -- it's never good to look too deep into things like this. 😃
Happy buying! Or leasing!
"Buy that which appreciates and lease that which depreciates."
pay cash for used car. No bank or car dealership will never steal my money again.
A lease makes no sense if you put a lot of miles on the car every year, the excess mileage fees ( usually a dollar for every 5-7 miles) can be huge, plus at the end of the lease you have no more car, have to go the entire shopping process again and have to come up with a new deposit.
Has he talked about buying the car after the lease is over, is that a good deal?
What he is saying has merit if you're going to buy a new car. But nobody should buy a new car unless you have more money than you know what to do with. I buy used and cheap. Never paid more than 11k for a car and that was 22 years ago. I have a 26 year old miata and a 16 yo Prius. They look good and run great. $600 a year insurance and $130 a year in taxes. I drive about 1k miles/mo and spend less than $60/mo on gas. They are both reliable cars so I have minimal maintenance costs. My last new car I bought 21 years ago.
Wow...the video quality is the best I have ever seen on UA-cam.
I'm glad you like it! Thanks for taking the time to watch and enjoy :-)
@@CarEdge how u doing sir i would like to make money in this industry , could you give me some tips on how I can do so Please & have u heard of a website by the name of beforward selling used cars
is it legit God bless you for the time i will keep u in my prayers Amen
u can reach me on my. e-mail boxingfamily101@gmail.com
If you cant pay cash for it you cant afford it!
Then most people worldwide can't afford things, but yet they still want what they can't afford so that is where credit comes in to help drive the consumer economy.
@@CarEdge thats why most people arent wealthy.
@@CarEdge problem is people arent patient. It takes 5-10 years to save up. People want it today right now.
@@CarEdge you are not too bright financially.... leasing is never a wise choice nor is financing
@@didafm many need it today. Not about want. The wealthy borrow money and keep their cash. Pay it off early and borrow more money. They make money on their debt.
I enjoy your videos. Thanks for sharing your experience and advice.
Thanks for watching!
Everyone has a different perspective- not only with cars- but just life in general when it comes to what they do with their money. If you consider all the different people in your life right now- you’ll notice you have savers, buyers, and others kind of in between. Since my first car in 2002, I have purchased two others, totaling three cars in in about 18 years. I paid cash for my first- a used Subaru Legacy, and financed the other two. Drove the first two into the ground and now currently in my second year of the third purchase. I’ve been happy with my personal way of spending my hard earned cash in cars but on the flip side I have friends who make a ton more capital than me who enjoy to lease their cars and they seem to do fine with that way of spending. I guess the end game is that there’s no perfect answer to any of this. It’s not necessarily terrible advice to encourage leasing because it does work for some and vice versa.
Pay the maximum amount on a mileage or point earning credit card that the dealership will allow.... usually $1500-$2500 and the balance in cash... for a solid used/ off lease low mileage car. Lexus or comparable. Pay the credit card off with your next monthly statement.
I can't imagine why anyone would be apposed to paying cash
Don’t buy any car that you couldn’t pay cash for. If you can invest the money at a higher rate than you’d pay to borrow it, do that. Otherwise pay cash.
Financing and pay interest no thanks
From a strictly math point of view, you are correct, you can finance a car at 2.9% and invest in the stock market and make more than 2.9% (hopefully). But there are two things the “math” doesn’t discuss, Risk and Peace of Mind. There is a risk that something may happen over a five year car note that makes it more difficult or impossible to pay that $500 a month payment. And there is peace of mind in the knowledge that, if you paid cash, you own that car. It can’t be taken from you if you get downsized or have medical issues. Each person decides what risk and peace of mind are worth.
Your analysis is better than all of the other comments.
Lease companies aren't stupid:
They do the math because they lease you something which depreciates in time, let you pay for the interest, the depreciating part, and are able to make a profit from it.
A lot of people are bashing Rays advice in the comments below. In my opinion depends on the car and brand you want in your driveway. If you are a flashy person who likes to drive a status symbol to work than lease is your best bet because people like that will get bored of their car in 3 years and wants to upgrade so this way a lease you get the latest and newest and don't have to worry about upside loans when trading in. Not the best way to own a car but so is not buying 100$ t-shirts. Buy new can be tricky if you don't finance with the right terms and good interest rate for under 3 years never ever buy more than 36 months and make sure the brand you buy new will hold value you know which ones. If you are going to buy used go private and get it checked out thoroughly by a professional you trust even if it cost 100$ and you find out its no good better to waste 100$ than 10-15k. The people who say only pay cash and buy a reliable car and drive it until the wheels fall off are basically only going to buy Civics and Corollas and not everyone wants a small car forever so to speak. My advice never walk into a dealer/stealership and do not get your car serviced there unless basic maintenance usually since they are done all the time the cost is fair to market. Pay cash or get loan thru your bank to private prior to sell have a expert check it out and get a unbiased opinion and take care of the car and when you need to move on sell private. This way you save on both fronts and if your lucky sometimes you can get away driving a car for years and only taking off 40% of your initial investment. So for example you buy a car private for 15k cash/loan for a 3-4 years old model under 40k mileage and you drive it for 5-6 years now your 10 yr car now has 120-160k mileage is worth 7- 9k if still in good shape so you as a buyer you spent not including maintenance because everyone has it to drive 20k miles a year hopefully trouble free at under 2k a year in deprecation cost is going to make you and your wallet very happy. Be safe. Thank you Ray for your no hard sales approach videos.
I have always paid cash for cars (new or used) with ONE exception. CD interest rates were at 6%. We were offered 0% financing for 2 years (BTW, $999.18 a month payment on a $24K vehicle). It worked out that over the 2 years the money averaged (remember you are losing it slowly) about $600 in earned interest. I just like the fact of owning something. Also, I don't like the gimmicks of lease return mark-ups, "Oh, the (fill in the blank) needs replacing."
I drive a 20 year old 2000 Mazda Protege. $1,900 in 2010 but the state smog buy back paid $1,000 of that for my old car. Thus, a $900 car. I just passed smog and now look forward to getting at least 11 years out of the car. For nearly 30 years my "daily drivers" have been a break even deal once the cars are disposed of (state buy back, cars parted out etc.). I can't fathom people who pay $300+ a month - FOR LIFE!
I'm going to say no to lease if you daily drive it. Drive a lot. Long distance. Due to milage overage. Could cost you tons to turn it back in at end of lease. Sister in-law always leased and ended up costing her over 7k at end of lease due to miles over. She changed her views and bought her next car.
Dave Ramsey FPU graduate here. Save up, pay cash, save for retirement. Why give other people your money when you don’t have to? Don’t!
when you finance with the dealer, the dealer gets a kick back on the loan because they get a lower rate then we do.
so the dealer wants you to finance with them . Yes?
It depends if the car is a good deal. It depends if you could invest the money and make more than the interest you would pay for the car. It depends.
leasing is for suckers: the customer pays for most of the depreciation of the vehicle.
on financing: the dealer gets back points from the lender, like a mortgage deal.
you buy , you own something at the end, you lease, you get nothing for all your money. and leases charge by mileage. so if you drive alot, like me 15k per year. better off to buy, and hold of to for 8 or more years....
That was very interesting.my friend needs a car, she is looking at LEXUS RX 350 2009 as a student. intend to do security loan. Is supposed be $5000.- 7000.00 what d you think ? pay cash or the SECURITY LOAN.? her credit is AVERAGE she was told.SECONDLY RX 450 LEXUS 2010 or refinance with a dealer? please reply.
Only problem I see with Leasing, is the fact that its actually renting but with a more subtle word like "leasing".
With that being said, what's the real point of leasing/renting for so many years? That's the question I want answered. Is it really financially smart to be leasing/renting cars all your life? Because by common sense, that doesn't sound good.
Please get me out of my confusion here. Thank you.
Ray you just helped me make a decision on my new car thank you
Find a used car with 5000 to 15000 miles or less miles, with a warranty still active and pay cash!! Why give the bank thousands in interest if you have the cash at hand, save up and buy. If you can pay cash your probably wise with money and dont have to worry about a high credit score.
So for the mileage you suggested here that car would probably be more than $10k right? So you are saying pay straight up hard cash for it? Thanks!
@@potterylady44 not neccesarily, if you avoid dealerships. Buy independent seller, regular joe, trying to sell. Yes pay cash. Although if you do go dealer, dont say you will pay cash until final price is agreed upon!
@@potterylady44 toyota corollas are go afforable cars, low mileage, last forever and buying used you might find low price deals....
Enjoy yr channel. I keep cars 12 to 15 yrs so leasing not an option. Also I buy used cars so I'm not hit losing thousands driving it off lot.
What u say makes sense if u want to drive new cars.
Ad u say cars not an investment.
Hey Ray, Ray here. You do a great job explaining things in these videos. I've been selling cars for over 10 years and have made a good living at it by being honest and upfront with my customers. Customers who watch your videos are probably more prepared and will probably have a more pleasant experience once they do the transaction.
People who watch these videos will get taken to the bank. He is talking as a salesman or manager. He does not give any helpful info for buyers. I feel bad for the people who thinks that he is helping out.