Why You Should Finance Your Car (And Not Pay Cash) finance a car

by eqreBORN



VÉRIFIEZ LES VOITURES ET LES ENCHÈRES ! Oui, c’est vrai : vous devriez probablement financer votre prochaine voiture, et ne pas payer comptant. Aujourd’hui, j’explique pourquoi il est souvent plus judicieux de financer votre voiture et de ne pas payer en espèces – et j’expliquerai les scénarios dans lesquels je pense qu’il est préférable de financer une voiture que de payer intégralement. SITE WEB & MARCHANDISES ! SUIVEZ-MOI! Twitter – Instagram – Facebook – TABLEAU DOUGSCORE :.

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Why You Should Finance Your Car (And Not Pay Cash)

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Why You Should Finance Your Car (And Not Pay Cash)
finance a car
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Vous pouvez trouver plus d’informations utiles ici: voir plus ici

READ  AU Small Finance Bank Account | 7% Interest rate?| Advantages and disadvantages| खुलवाए या नहीं? au finance

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45 comments

Espinoza Novak 03/12/2021 - 5:32 Chiều

Simple rule to financial success. Never borrow money for anything except real estate.

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Colton Loberg 03/12/2021 - 5:32 Chiều

Here's an idea, only pay under 3k for a used car, ever, save $10,000 plus buying used from a dealer (or private)
I pay $500 most for my used cars
Use them for 1-6 months
Sell them for 1500+
Have a new car every couple months
Make 10,000 plus a year on used beaters

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AutoTempest.com 03/12/2021 - 5:32 Chiều

One minor quibble I'd have with this is that except for young people or those in particular circumstances, it's not normally recommended to have one's entire portfolio in equities; it's better to diversify to smooth out the volatility of the stock market, saving you from an unlucky streak as you get nearer to retirement, as well as preventing people freaking out at market swings and then making poor decisions. So a standard portfolio would have a mix of equities and fixed income – and that fixed income will often be paying you less than you'd be paying on your car loan, especially if you're investing in a taxable account.

That said, I still largely agree with the advice of looking at opportunity cost. Same with aggressively paying down a mortgage vs investing.

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Matt Howell 03/12/2021 - 5:32 Chiều

If the interest rate in the vehicle is about 3%, but you have some sort of endeavor that you dabble in that will earn you 9% return on your money it would make sense to have the liquid cash on hand to make the 9% and pay the three and end up ahead.

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Pro Race 03/12/2021 - 5:32 Chiều

I always say that safety is the only reason why I would buy a newer car. I simply like the old ones more, but safety is SO important, that going with a really old one, it just do not pay.

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Jon 03/12/2021 - 5:32 Chiều

The important concept is .. opportunity cost… It is a difficult concept to grasp. Check Potter & Sanders (2012) Do Economists Recognize an Opportunity Cost When They See One? .

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Jack Chalmers 03/12/2021 - 5:32 Chiều

Thank you so much for hammering home the point about safety features. Billions have been invested into car safety and it's worth every penny for the lives it's saved. Get something with a good Euro NCAP rating!

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TooCoolForSleep 03/12/2021 - 5:32 Chiều

Thanks for the advice! 🙂 I'm a young man who's 22 with zero credit and I'm very much looking to buy my mom a new 2022 Lariat Maverick with cash (upgrade from the 2008 Ford Explorer that I spent $5.4k off of Facebook with cash) which is about $26k not sure how much they would lower the price from $26k but I doubt I'll get any less than $23k. So because I'm male with zero credit and finally getting around to my license, I'm sure my interest rate will be 10%+ easily. So wasn't sure if putting $10k down and paying off the rest would be better than paying the $26k (which could be lower upfront). But since cash would be a done deal, the loan with a high interest rate might make less efficient money use. Though since I have zero credit, it would give me a great boost to starting it. Currently mixed mind set so if anyone can suggest the best or other option(s) I haven't, let me know 🙂

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Saturn 03/12/2021 - 5:32 Chiều

w vid

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Michael Bernardo 03/12/2021 - 5:32 Chiều

This is bad advice that can be dangerous if it falls into the wrong hands. I strongly advise to spend no more than 5% of your overall net worth on the purchase price of a car, and pay for it in cash if possible.

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Mike H. 03/12/2021 - 5:32 Chiều

Sorry Doug …
Debt is bad …

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Tenzack YOGI 03/12/2021 - 5:32 Chiều

Let's go to junkyard.. thats far better than financing.

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Teacup Toe 03/12/2021 - 5:32 Chiều

Hi Doug, I'm about to apply for a $20,000 loan, 60 month. The interest will be about $2,000. Would it be helpful for my first payment to be $5,000 to save on interest?

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josh3221ify 03/12/2021 - 5:32 Chiều

The reason those frugal people are still driving around in those 20year old cars, is because they are good drivers, no amount of tech will ever make you a good driver, and people still die in modern cars with many airbags, no airbag will save you at speeds in excess of 250km/h. We also think tech has advanced, but in reality its at its still at its infancy, most of these systems only prevent fender benders and scratches on the bumper, manufactures are just hyping them up, if proper studies are done they will see no improvement in safety overall with the addition of these systems. Just a way for manufacturers to get you to buy a new model every 5 years.

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josh3221ify 03/12/2021 - 5:32 Chiều

1% interest in USA, as for many people across the world where interest rates are as high as 8-17%, getting loans for cars would cripple them financially.

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Brian G 03/12/2021 - 5:32 Chiều

Hi is $250 an month for 6 years an good deal 8% interest rate. I do need to build my credit score its very low

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Shadow Tiger 03/12/2021 - 5:32 Chiều

With a new car no smelly fart cushions no snots spit or who knows what else among a bunch of issues of how the vehicle was driven. I will always go new and drive it until it stops and becomes a money pit and then buy new again. I don't care about how much the value goes down off the lot because i know exactly how the vehicle will be driven and i do all the mechanical work when needed. No thanks to fart snot vehicles and who knows what else.

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U WUT M8? 03/12/2021 - 5:32 Chiều

as long as the interest is less than 3.x% its a good option

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iComplainer 03/12/2021 - 5:32 Chiều

video starts at 4:55

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CapFlipGaming 03/12/2021 - 5:32 Chiều

Dave Ramsey is an idiot, take his advice with a grain of salt.

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Questioner 03/12/2021 - 5:32 Chiều

If it is for a reliable car to get to work, someone not mechanically savvy may save money financing something a little more expensive but more reliable, like a $15000 Corolla instead of a $5000 one.

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Kathy Johnson 03/12/2021 - 5:32 Chiều

All you need is an old reliable truck. Now thats an investment. Trucks last forever. More reliable than all these non-american cars that are as reliable as a McDonalds soft serve machine

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Emiliano Rosas 03/12/2021 - 5:32 Chiều

– Never buy something financed-
– Oh, so you don't understand opportunity cost. I am sorry-

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tom kouri 03/12/2021 - 5:32 Chiều

It's easy to give this kind of advice when you can look back at market returns rather than predict what the market will do over the life of the loan. I like Doug when he's talking about cars. Not so much when he's advising on finances. So many assumptions he's making here as well as suggesting that an investor's "piece of mind" has no value? Nope…

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David W 03/12/2021 - 5:32 Chiều

I admit that financing motor vehicles is smart in some cases but when it comes to backup cameras I have driven modern vehicles that have had them and those that haven't. It may have been only in the last several years that backup cameras haven't just been in the luxury types.

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GreatestVersion 03/12/2021 - 5:32 Chiều

Honestly a decent take. A new perspective for me

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Jay Say 03/12/2021 - 5:32 Chiều

Seriously, stick to car reviews mate.

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Chris Whiston 03/12/2021 - 5:32 Chiều

Per usual, Doug drones on way too long about this. I put a hard line at 5% on a car loan. If you can’t qualify for a rate below this level, you should be paying cash for a used car. Regardless of opportunity cost, someone with bad credit doesn’t have any business levering themselves up if they can’t even pay their bills on time. When Doug mentions 6-7% being the cut off, he’s being laughably ignorant given anyone paying that high of a rate likely has a history of collections or not paying bills on time, for example. They’re not going to be invested and even if they did borrow to invest, by the time taxes were figured in, this hypothetical borrower/investor would not even come out ahead (using historical spx returns as a guide) – so there would likely be no advantage but yet market risk that would not have otherwise existed which has a cost in itself, especially tail risk. Stay in your lane Doug.

Actual decent advice given the current climate would be this: If you own your car but have a high interest credit card or other loan, a risk-less way to come out ahead would be to cash-out refinance your car. You’d take a loan out on your car at some low rate (likely 2-5%) with a long term and use the proceeds to pay down higher interest and/or shorter term debt. Instead of making those large interest and/or principal payments, you simply make car payments on a long term vehicle loan which doesn’t charge much interest given its secured nature so it doesn’t bleed you dry every month. Rates are typically affordable out to 84 months…

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SocksOnFeet 03/12/2021 - 5:32 Chiều

You put down $20,000…you make money off the stock market…you have a ton of money already bro. Banks dont give poor people like me 1.0% APR, they give us 5-12 % APR on a 7 year lease…that can be an extra 10-15k on top of the msrp on something new over 30k. You dont have the problems that poor people have. We buy $2,000 cars and fix them to last as long as possible. I love your content but you sound like a delusional rich person in this video lmao play the market! play the market! What part of we dont have money to "play" with don't you understand? Lmao…wow….

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Chico Dust-E 03/12/2021 - 5:32 Chiều

Damn $50k at 1.99% is $9,950 in interest! 👀

It's definitely smart to invest but that's more than I paid for my last car lol. I bought a old honda, rebuilt or replaced everything that needed it and its been running for 12 years now.

I can't swing $1,248 a month for just a car, that plus insurance is my rent lol.

Doug talking big money moves but it's decent advice.

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retina gland 03/12/2021 - 5:32 Chiều

understood, i'm gonna pay cash for a 1985 Ferrari with no airbags so i can save money and own it myself 😉

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Petri Burger 03/12/2021 - 5:32 Chiều

Doug thanks for the info. But i still have an issue. Again, like all these money savvy ghurus… all!! Is in every single one off these money savvy advices only work for the guys/ladies that do have the money. Here in SA, we will never see 2%, we dropped to like 6%, for a few months, here not even the middle class have can save up enough just to buy a decent vehicle, not even talking about the exotics and supercars, not even mentioning fuel and insane tax brackets we live with. Thats why we work towards paying cash as the majority cant even get through the month. Whats your advice for the middle class and lower?

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lilfridge 55 03/12/2021 - 5:32 Chiều

I do agree yet I have a 1993 Nissan Sentra I bought for $200 clean title straight body runs with no issues and it’s had service it’s an entire 300k mile life and I got in a 70 mph accident into a concrete barrier on the freeway cause people can’t drive and I was left with a scratch on my fender

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Glenn Oropeza 03/12/2021 - 5:32 Chiều

I disagree! Credit is overrated and cash is still king! Yes it does help to exercise your credit but at age 59(me) less debt is more!

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drdomer 03/12/2021 - 5:32 Chiều

This is not a good argument. If I have $70K to use for a vehicle, and I buy the vehicle I have spent $70K. If I spend $20K on the down payment and invest the other $50K, then I still have to spend $50K plus interest over the next 4 years to buy the vehicle meaning I have overall spent $120+K. Yes, overall I may offset the depreciation on the car with gain from my investment, but you need more money to do that. Most people don’t have the budget to do that. They have the budget to do one or the other. Which gets more to the argument that you should have spent $20K on the car in cash and invest the other $50K.

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jarmelo2006 03/12/2021 - 5:32 Chiều

I don't have 20,000 to down on a car. I'm torn between saving to buy a car or finance.

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Sean Lucero 03/12/2021 - 5:32 Chiều

Doug – the general public is not smart enough to consume this guidance and deploy this strategy. the average joe makes $45k per year and leases a Mercedes E class for a 10 year lease with $500 down.

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Jeremy Peters 03/12/2021 - 5:32 Chiều

Ya finance a car so you have monthly payments, if you mortgage free, no student debt, medical bills, expenses etc ya finance a car otherwise you’re a fool

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Shane F 03/12/2021 - 5:32 Chiều

Djia is only at 35k today, 5 months later

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Chris Monroe 03/12/2021 - 5:32 Chiều

Have a depreciating liability or have an asset… Hm…

Finance realty… Not vehicles… If you can help it.

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Jeffrey Moss 03/12/2021 - 5:32 Chiều

There is a funny juxtaposition in the video. Early on, the argument is that you should finance the car and then invest in the stock market. In that scenario, the buyer takes on market risk, or the chances that they might lose money — especially in the short term. Then, later on, there is an argument that you may not want to buy a cheap old car because they are not as safe. In that scenario, the buyer is recommended to avoid a safety risk. Two different takes on risk, with two different conclusions. What are the odds that the stock market will go down, vs. the odds of being in a crash that threatens the passengers' safety? I'd say the former is more likely, although it really does depend on time you can commit the funds into the investment. Doug is not being inconsistent, but he is reflecting his feelings of these two risks and how he weighs them. And I think that's really the takeaway here. It's not about the best decision, or the perfect option, it's about balancing probability. Ultimately, that will vary from person to person based on your tolerance for different risks. In any event, a good video with solid points to consider.

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Steve Dong 03/12/2021 - 5:32 Chiều

The only thing matters is weather if you can AFFORD it, not the you pay.
Car sales only keep talking about monthly payment to make it sounds reasonable, but it make no sense at all.
Unfortunately the majority of people don't have a clue.
And it is more unfortunate that the people who are paying 20% APR actually don't have the choice of paying with cash.
The people who are driving 1990s corollas probably have more debt than the worth of their lives.

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Matthew Hanlon 03/12/2021 - 5:32 Chiều

Doug, your advice here is pretty short-sighted. We are in a period where finance rates are historically low and we are in a prolonged bull market. That won't last forever and you are not considering the risk of putting money in the stock market. Your example of earning your finance cost back in a month will not always be the case, so you are cherry picking data to make your point. You could just as easily have lost money during that 1 month period. You only have to look back to the beginning of 2020, and all of 2008 to see how easy it is to get burned by applying your financial advice. The good times don't last forever.

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Controverse 03/12/2021 - 5:32 Chiều

Doug the goat. Thank you for this

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Karine Lalonde 03/12/2021 - 5:32 Chiều

LOVE the dog in the shot! Thanks for including that here 🙂

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