Bought my car at 3.999% then refied down to .99% saved me $1,000. Plus yeah... Opportunity costs!!! Made way more by investing that cash vs paying off my car
Finance your car, use the money to buy a house. An appreciating asset.
Financing my cars is probably what I would have to do to buy any sort of car i want. Looking at cars such a the 8-series, and which costs like 115K-€ base, which I’ll probably never be able to afford and maintain realistically.
I think paying with Cash is better for low amount cars, such as below 15k. But beyond that, of course if you can get really good interest rates you're better off invessting
It can* be a good idea.It is not a good idea if you do not make a ton of money and that the financing is making you live paycheck to paychekck
So you would still have debt on a depreciating assett and the rest of your money is tied up in a volatile market?
So does that mean I can pay with pennies?
This advice is for people that have 70k in cash burning a hole in their pocket, not a 21 year old fresh out of school :)
I would never, I said NEVER finance my car. It is a DUMB idea af.
Based on your logic, you should have financed the entire cost of the car. Your argument literally only works with hindsight that short term the market did well. There are obviously periods in history, especially short term, where the market doesn't go up.
Doug, Great video! hope someone out there was listening.
Taking on debt is just a took in the skillset of acquiring wealth. I recently bought a truck. Could I have paid cash? Sure. Makes far better sense to pay off 1/2 of it and finance the other half at 2% though.
Skip to 5:00 mark if you want to hear his reasons without a 5 minute windup
So effectively what you’re doing is taking a loan and investing the money on the stock market. There’s no need to involve a car in this scheme.
Great advice Doug. However, if you want to lose money, then buy a car. That said, the best time to buy is when the car is about three years old. A friend last week bought a 3 year old Jag XJ. New price three years ago = £75k. He paid £30k with only 24k miles on the clock. That means its depreciation over three years was 60%. Incredible fall in value however, we know that Jags do not retain their value. Beautiful car nevertheless. Keep up the great work Doug.
This is the absolute worst argument ive ever seen someone try to make.
Have debt, and gamble the money you do have!
Your whole argument (6:20) is that the stock market always goes up. I think that's a foolish assumption
noodle is lookin quite spiffy
Backup cameras have done nothing for safety except make people pay even less attention backing up. They're not a safety feature, they're safety theater.
Should i finance a used one? Considering that it’ll be braking while still paying off the debt
what da dog doin?
that's a bit risky to invest in stocks while indebted
He's worth a couple million dollars lol he'll be just fine
lol nah I’m good
When did your car show become a financial adviser l
I'm not going to lie, when the dog disappeared I fast forwarded to see if he popped back in.
I don’t finance anything that’s for the suckers.
Uhhhh what is the point of this video?
best financial advice : buy 4-5 years old Japanese reliable car at 50%-60% off MSRP sell before it starts to require some major services at 7-9 years, works for me just fine. resell value almost same as purchase price
1 caveat: people who go into debt forget their obligations, and spiral into indebtedness. Classic example is credit card death spiral: charging until card is max'd out and then opening a 2nd credit card to pay off the 1st, etc. Otherwise Doug is right: take leftover $ and invest it _if_ net returns exceed compound loan interest; don't just buy depreciating assets with cash..
Finance your car instead of paying cash... BUT FIRST: Check out cars and bids where you bid on cars that you buy with cash
At 4:53 he starts to get to the point of this video. Don't waste time watching anything before that
He’s really saying the same thing as the “budget types”. His strategy only applies if you could otherwise afford to pay cash… but here we invest instead to get the return and negate the finance charges. People that live paycheck to paycheck… you have NO BUSINESS financing a car.
i love doug
10 year finance on a $3000 2005 Corolla? You got it Doug!
Solid video Doug!
Doug (A Millennial) is giving the same advise of my Dad... We, as a society, will be fine :)
It's very simple, you need money to make money. When you buy a car outright, you no longer have the money to make money. The only question is, can you finance lower than 9% (the average stock market return)?
If you expect more from your money than the cost of the loan, take the loan. That's really all it boils down to. The secret is that most people will not invest that money. They will spend it on some other BS.
my rusty and trusty 1500$ 2000 Chevy S10 ZR2 that I start with a screwdriver allowed me to pay CASH for my first piece of hunting land at 25 years old. Screw a payment and screw the bank to. I'll gladly finance a house because it gains value, but a depreciating asset like a car? No.
No Dougscores ?!
7:45 You would think that having money gives peace of mind also LOL
The doggo in the driving place
Scotty must have hacked: More Doug DeMuro, account
My first thoughts are… everybody that has money in the stock market already knows this, and everybody that needs to be told this doesn’t have the money to take on the debt.
"they think Peace of Mind has a big value"
Enjoy life people! As my grandfather always said..."only guarantee in life is death" but then again if you are broke you can't really enjoy life either. sorry for the darkness in this one lol!
How is debt cheaper than no debt? I bought a honda 10k and could have financed for relatively cheap 3.5% apr 48 months but just bought it outright. Without paying interest I had more to contribute to my 401k
Could have bought a cool used 20k car and still invested the 50k. I recommend looking at Cars and Bids.
IF your financial plan has this many “ifs” for the future, it is only a good plan if those “Ifs” end up being positive. IF you would have paid cash and your revenue would have fallen 35% and/or lost your job you would have been better off by having no payment. One shouldn’t assume that things will never change.
Ah okay, so we're assuming I have enough money to my name to fully pay for the car but still finance it anyway 😂
skip to 4:55 for him to actually start answering the question
so I should finance a 300 dollar 94 civic ?
Nope, buy whatever you can afford outright. You might not be able to drive a Defender (hehe) but you also won't have debtors tracking down your ass and your car is yours. If you're rich enough rent a supercar and then you don't have to worry about the insane maintenance costs.
Excellent video! Recently purchased a 2021 C8 Corvette at MSRP. I am retired and had plenty of money in a 401k that I could have used to pay cash for the car. Financed $60k of it at 1.99%, keeping the cash I could have used in the stock market. Another key point for retirees is the tax liability of withdrawing money from a 401k. I would have probably had to have paid at least 20% in taxes, about $12,000 on that money. Finance charge for 60 months is $3,600. If there ever was a no- brainer, the loan was it!
That 96 accord wagon is safe, people texting and driving is not safe.
Doug in theory this works. The problem is people will almost always buy too much car because they only look at the payment and not the cost. And in many cases they will do ultra long 72 month loans which leads them to be upside down on equity if they trade in. So yes your theory works in a bull market but more times than not people will not buy responsibly.
Preaching to the choir
Smart way. "Cool cat"
5:14 how is 1.99% free money...even at 0% it's not free money. Free money means you don't even have to repay the principle. Just free money given to you and no need to pay a single dime back. And I have seen 0% before. Also there's no guarantee win at the stock market, what if you lose during those months...double losing then. Not the best argument. There are also fees, opportunity cost, taxes, etc, in stocks. And he is assuming everyone is buying a $70k car. For less than $30k or $20k, it makes more sense to pay cash. And yes, to some people, peace of mind is priceless. You have to worry about 2 additional things (not 1) if you finance, that is to pay your car payments for whatever the number of months and to keep an eye on your investments. Some people would rather have none of the above.
So, if you can afford to pay cash, finance the car if rates are low, I get that. If you can’t afford to pay cash, then don’t finance, but then you need a car to get to work and you can’t get those low interest rates.
The advice Doug is saying, is to get a good loan, and invest the cash. It’s good advice, for people who already have the knowledge to make these types of high dollar investments. For those who know how to invest, likely, they already make these types of decisions. Because cars in general are terrible depreciating assets, I tend to buy them used at aggressively low prices. Other than gas and maintenance, I’ve never lost a large sum of money on a car in 20 years. Some of the vehicles I’ve bought actually increased in value, so I’ve sold them at the same price or more than I bought them for. However, I recently made the decision to buy a new car at a dealership paid full in cash because I wanted the vehicle. Not because I needed it…. Same goes for every luxury item I’ve paid for. For me, when investing money with an expected return, I prefer investing in property, education, stocks, and retirement funds.
What if we buy reasonably priced reliable regular used cars?
Lol what if we dont want to invest
Always finance a car under 3% and invest the money, instead of pay cash for cars, dave ramsey plan is for failures, not for smart leverager Debt free is a LIE,a SCAM, u ALWAYS have bills to pay, just how big of them Mortgage / property tax Utility Insurance Grocery Internet Cell phone These 6 catagories is already a MUST for modern lifestyle Just try to make more money to off set thr bills AND of course, not changing cars every 5 years, just drive every car till it shatters
This is only good advise if you can afford to put 20k down and have a car payment of $1060 for the next 48 months.
Not really, it'll work just as well for someone putting down 5k and having $400 monthly payments. You're just working with smaller overall sums.
Does Doug not pay taxes on his investments?
So risking for short term is smart NOT haha. moronic mindset.
There is one problem with the advice. If you put your cash into a stock market and finance a car, you need money in you monthly cash flow to pay the financing every month. I.e in case of your Defender, you need about 1100 each month of additional expence for 48 months. If you can handle it - then the strategy is a right ond for you.
If safety was your main focus, what’s the oldest year that you would suggest buying a car?
At this rate he is prob also thinking lease don't buy... idiot Doug. Come on man, if u can use cash do it, if u can't then take this advice (odv be careful w the markets)
Dave Ramsey would like your location….
so technically financing is a way of leasing but with more freedom, i get u doug😂
Oh and as far as safety goes you're going to be safer 60's and 70's muscle cars compared to new muscle cars.
@Avery Holder How not so? You don't think the monstrous size of old muscle cars is of a benefit? The bigger and heavier the car the better it is for occupants. No comparison between old and new muscle cars.
Financing a car is never a good thing. That is the reason new cars oversaturate the used car market and the used car market has amazing cars on it as it is. What reason would someone have to buy a new car if they're educated on cars they'd realize new cars all look the same and aren't built to last.
I take it Doug isn't the type to ride motorcycles
Use debt to obtain appreciating assets. That's how most wealthy people begin to make money. Buy property, rent it out to make a small amount of passive income. Build equity on it. Then take a loan out using the house as collateral. Repeat the process....and least that's what I've been told by and seen from wealthy people.
wonder if Doug s advice would have worked in 2008 2009
1.99 is not zero, it is 2
2%? In México average rate for car loans is like 12%, if you get 7% it's a bargain.
Earned back your finance charges again before short-term capital gains tax I’m assuming?
An American tells you to finance a car. Ironic
Doug, you make a great point most people don't think about, the brakes on my old 1996 Beretta were terrible, even with a big brake kit. I feel great knowing my Lexus has blind spot monitoring, great traction control, loads of airbags and great brakes.
This perspective is true, but most people aren’t millionaires where the Land Rover was 1 percent of their income and so financing and risking the rest at any risk level would make sense. For someone making 300 k and buying a 70 k car and they get hurt or something happens, that car could prevent them from taking care of their family. I’d rather be somewhere in between where my car still isn’t tied up completely in debt but still utilizing investing.
Lol, stick to cars reviews. Don't listen to this guy, at least not until he understands volatility, risk, opportunity cost and depreciation.
What are you standing in front of ? What is the car in the Cars and Bid commercial?
Stick to car reviews buddy .. This is the equivalent as; people who don't bet on Sunday's game are losers! Over the course of the 48 months, do you think the DOW will continue to rise at the same pace? Come on Doug .. you made a bet and won (for now.) And that's how Vegas was built .. by letting you win - a little. Cars are appreciating and money is free - sounds like a real sustainable model to me. Lets revisit this video in 5yrs.
I want a Doug Stocks channel. Can you imagine Doug buying weekly options on SPY?
2:18 it’s magic: doggo disappear
Your example assumes that folks want to remain "in the system." If you can live cheap AND off the grid of all the noise the world provides then wiser to pay cash. There can be tons of scenarios where cash is right but tons also where finance could be right. My father has paid cash for everything for 50 years, lives in a very modest home and has NO bills and he does fine. If on the other hand your goal is to always strive to BE someone then whatever.
Borrowing money to buy a depreciating asset is ludicrous. If you dont have the cash, you cant afford the car. In dougs case he should be buying a 20k car not a partially financed 70k car. I like his videos but this one is moronic. AND, its for a Landrover, the worst piece of indian/chinese crap ever. Our wonderful 2004 bought new corolla just died, replaced it with a very low mileage 2013 Civic SI thats a blast to drive. Car loans are to the middle class what those check cashing places are to the lower class. Just learn to set your expectations to a reasonable level and invest as much money as you can in things that dont depreciate and actually earn you money. You'll be thankful cruising into your senior years with more money than you know what to do with.
Unrelated but I feel like most people who drive modern cars (crossovers specifically) are awful drivers. All over the lane, slow, braking when no one is in front of them, etc... At least here in Florida anyway
You cant put a price on the sense of calm and relief that comes with having absolutely not debt or payments.
Hard truth: really well to do individuals pay cash for their cars. That's because they aren't buying flashy cars and aren't wasting time investing the difference on what amounts to a small amount of money for them. Not so rich people finance cars that they can't afford, end of story. Like, look at the percentage of cash buyers for Subaru's vs BMW's, and Subaru demographics lean towards well to do but not flashy rich families.
Cars & Bids financing options soon??
So basically everyone should finance their cars if they’re wealthy and have an 800 credit score. Got it
Actually yes, what I've noticed is that rich people never ever buy with cash, they do everything in loans all the time, and that's how they actually increase public debt. The higher position in a company, the more money you borrow and buy stuff with someone else's money (bank) and keep your money from salary and bonuses to increase your wealth. All assets that lose value fast, are financed. It's a crazy, but it's actually very expensive to be poor.
financing at under 2% is literally free because inflation goes up by 2%, essentially meaning you are spending 0% interest on your loan. don't finance if you can't get it under 5% because then after inflation, you are essentially matching the stock market or losing money based on historical averages and the tax you pay on that gained money.
Utterly distracted. NOODLES!!
yes, buy a reliable used car and pay cash.... From an old guy that has been around the block.