Financing vs Paying Cash for Cars: What's the Right Answer?

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  • Опубликовано: 3 фев 2025

Комментарии • 77

  • @johnhufnagel
    @johnhufnagel День назад +23

    rule #1 I always tell people who are thinking about getting into cars... have an "appliance" car already, preferably paid off. When you don't want to drive the Pride and Joy because of weather, people, destination, or it's "broken" (like that'll NEVER, EVER, happen) you need to be able to get to that place that gives you money for your time, so you don't become the next Cardboard Box resident. It doesn't necessarily have to be boring, but it has to at least be expected to be problem free.
    rule #2 if you have "bad" debt (credit cards, HELOCs, capital improvement loans, a car payment already, etc.), basically anything NOT a mortgage, DON'T GET A TOY CAR. get your financial shit straight first.

  • @FVPS-ew2iy
    @FVPS-ew2iy День назад +47

    You know how someone follows Dave Ramsey, just wait 5 minutes, they will tell you

    • @switchcars
      @switchcars  День назад +31

      Five minutes? Dang. In that time 13 Crossfitters and 17 Vegans could inform you of their lifestyle

    • @johnbean2596
      @johnbean2596 17 часов назад +1

      Took about 45 seconds here

    • @jshumphress13
      @jshumphress13 16 часов назад +1

      God bless him, but that’s my father in law. All Dave Ramsey all the time. To be fair, they’re about to retire and will be comfortable at their lake house so 🤷‍♂️

  • @BMWVX
    @BMWVX 16 часов назад +5

    I can confirm Tyler has a point on having fun cars while younger, as does Doug on financial independence.
    I had a torn ACL and I couldn’t drive my 3 fun cars, so what’s the point of waiting til 60?!
    On the other hand, I also didn’t work for 3 months, and having 0 loans helped me keep my sanity.
    You’re both right.

  • @JKlein713
    @JKlein713 День назад +14

    Switchcast, powered by whiskey!
    Everything in moderation, including moderation.

    • @switchcars
      @switchcars  День назад +7

      Switchcast Whiskey Cask.....Surely we can shorten it even more. Shwickseycaskt?

  • @ambitiousceo
    @ambitiousceo 23 часа назад +8

    Life is extremely short. If you can get the car you want without impacting your lifestyle/budget get it. You won’t regret it on your deathbed. Ciao!

  • @austinkosters7826
    @austinkosters7826 18 часов назад +15

    At 19 If financed a 2011 wrx, it blew up a month after owning it. $8000 later in parts and months and months of my time I finally got it rebuilt. It cost me my sanity, a shitload of money, and a girlfriend. Literally ruined my life for 2 years.
    1 year after getting it rebuilt, I sent it into a tree at 60mph. It was safe 🤷🏼‍♂️

  • @Ryan_DeWitt
    @Ryan_DeWitt День назад +14

    To state the obvious, anyone selling cars for a living is going to prefer financing.

    • @switchcars
      @switchcars  День назад +13

      I sell cars for a living, and I advocated for cash in this video, as I always do.

    • @salami99
      @salami99 18 часов назад +1

      depends on the dealer. some used car dealers only do full cash here.

  • @Azook-jn9dy
    @Azook-jn9dy 22 часа назад +12

    My boss owns a Nissan Murano CrossCabriolet. Never seen it leave his garage. In Ohio as well.

    • @salami99
      @salami99 18 часов назад +3

      gods car

    • @jerzsubbie
      @jerzsubbie 6 часов назад +2

      If I owned one, I'd keep it hidden too, out of immense shame for such an abomination of a vehicle.

    • @LivingYourOne
      @LivingYourOne 3 часа назад +1

      @@jerzsubbie Hahahaha, was thinking the same.

  • @MrFixItGa
    @MrFixItGa 20 часов назад +2

    3:34 Tyler makes a valid point. It is very smart to make sure you have your basics covered and you won't do without something as important as a car if you fall on hard times.
    I have had a 2007 Silverado as my daily since 2014. This past October was my 10th year with that truck. I have put almost 200,000 miles on it on top of the 70k it has on it when I bought it. Almost 3 years ago, I bought a 2017 Buick Enclave with only 40k miles on it. It was supposed to be a backup/trip/weekend car only. (😂) I have put 54k miles on it since I bought it. 🤦🏼‍♂️We do take 5-7 trips a year in it, so I guess that adds up. LOL I financed the both of them. I very unintelligently got the 6 year loan on both as well. I try to pay things off early when I can, though. (That rarely happens) Life. 🤷‍♂️

  • @Mr.E4U
    @Mr.E4U День назад +4

    The Dave Ramsey training wheels is for people who aren’t responsible enough to manage their money. It really helped me get started in my early 20s but there’s so much more you can do with your money and credit within reason.

    • @switchcars
      @switchcars  22 часа назад +2

      I disagree, but that's ok.

    • @randomguy343BOSS
      @randomguy343BOSS 20 часов назад +1

      Agreed, I think his stuff is more positioned towards people who have spending issues, or those who know nothing. If you can maintain a good budget and follow it, his rules are far too extreme.

  • @meep4563
    @meep4563 18 часов назад +1

    My favourite thing to ask when someone talks about opportunity cost and loans being better is, what would you be doing with the money in the meanwhile, I've never heard of a good reason worthwhile of paying interest

    • @switchcars
      @switchcars  17 часов назад +2

      "tax writeoff" yep because I like giving the bank a dollar to not give the government a quarter

  • @davidyaroch6622
    @davidyaroch6622 23 часа назад +2

    1 Important factor ,especially with daily drivers , is to buy the vehicle you NEED vs the one you want. One's ego loves to write checks that the back has to pay.

  • @drakeanton2000
    @drakeanton2000 19 часов назад +1

    The Ramsey method is the safe method. Ur never going to be behind on payments or worry about having to come up with a payment if you lose your job or an emergency happens.

  • @QCLT4Guy
    @QCLT4Guy 20 часов назад +1

    Thoughts and prayers going out to those under water with their "Investment" Hellcats...

  • @__curves___
    @__curves___ 21 час назад

    The fact that Doug and Tyler reference my insult from weeks ago (the failed beard experiment) in the pre-show-banter is surprisingly wholesome.

  • @LivingYourOne
    @LivingYourOne 3 часа назад

    Simple Answer: I think if someone is the kind of person who's asking that question in the first place, they're probably going to be fine either way.
    My "why" behind this kind of thing is that my daily driver needs to work, needs to be able to go on road trips with ease, and I don't want the stress of constant maintenance and worry. So I'll happily finance newer cars with lower miles, so long as the numbers stay reasonable and it's not going to be a regret.

  • @timothycoyne5874
    @timothycoyne5874 2 часа назад

    I think NOT financing a weekend fun car, especially something older and not super reliable, is very smart. Financing a daily driver is what most people do, but I wouldn't want to do it with a second car, especially something I might have to put money into unexpectedly. Personally, I can afford a car payment, but not a car payment AND expensive maintenance and repairs to something that's much needier and spendy than my daily driver. Not to mention I need a reliable daily driver in the first place.
    A few years ago I had a car I was ready to sell or trade, had a lot of equity in it, and seriously considered buying a bit older, used 911, Boxter, or Cayman with decent mileage. I would have had to finance at least part of the purchase, but I'd have been able to put enough down that a normal bank or our credit union would have given me the loan. In the end I chickened out and bought something else, but I sometimes wish I'd gone for it.

  • @Chris_In_Texas
    @Chris_In_Texas 19 часов назад

    We play the, sure I will finance with you, and get the better price, then just pay it off as soon as the bank gets the loan (usually a weekish). Did that twice last year. Just have to make sure that there are no early payment penalties. 🤠👍

  • @audios22
    @audios22 6 часов назад

    Everything in moderation,,,Including moderation. I guess I fall somewhere in the middle of Doug & Tyler. I know the car I have at the time of trad-in is worth "X". I know the car I want is priced at "X". The difference between the two cars has to come from somewhere other than cash in my case. In my latest purchase, I financed that difference knowing full well I could pay it off within the first year of the loan. Which I've done. So I guess I'm stuck in the middle. However this is my last toy purchase. And we do have a "0" interest loan on the daily driver from GMAC (ALLY) Plus $2500 in cash as a loyalty owner in a GM car. Great topic.

  • @DarkClosetOfTheMind
    @DarkClosetOfTheMind 21 час назад +2

    Don't forget that money itself depreciates due to inflation, so if inflation goes up, you are paying back your loans with money that is worth less. :) If you can get a loan at 4% or less, then it is free baby!

  • @jtb9866
    @jtb9866 День назад

    I think it depends on people's circumstances more than anything. Maybe you're retired with a few fixed income sources like social security and a pension and would like a fun car before you die, a lot of people get auto loans to establish lines of credit in order to qualify for a mortgage. Five years ago getting an auto loan was pretty easy to justify for a lot of people as rates were lower than what a lot of stocks were paying in dividend yields. If you're looking for a third car and are getting rates in the double digits then it gets pretty hard to justify. Heck, even mortgages are pretty hard to justify at current rates.

  • @Heyitsallgoodman
    @Heyitsallgoodman 23 часа назад

    Tyler a 996 GT3 RS just popped up in New Zealand. One of 4 RHD delivered to the country. 32k kms. White/red graphics

  • @Troy_In_The_80s
    @Troy_In_The_80s 19 часов назад

    Buy things that go up in value, lease things that go down in value. I agree that you should pay cash whenever possible. Otherwise, the interest rate you pay for a loan translates into the interest rate you earn on your investments plus the taxes paid on capital gains. If the loan interest rate is greater than the return on investing cash plus capital gains taxes then it's cheaper to pay cash.

  • @joshuadoliveiro
    @joshuadoliveiro 19 часов назад

    I guess it's important to understand the nuance of what debt means to someone and what you're willing to deal with to achieve life goals. that being said, people generally don't have self-control and they finance everything in their life.

  • @ronald4life1
    @ronald4life1 22 часа назад

    There is a reason Gap insurance is a thing... Buy that brand new car "cash" but if it gets wrecked in 2-3 years you're out the full depreciation vs Gap eating it on a 0-4% loan.. However On a used I agree Cash does make more sense assuming the depreciation curve has stabilized - many 2-3 year old lease returns are technically used but they still go a ways to fall (non lexus luxury in particular)..

  • @EdDale44135
    @EdDale44135 День назад +3

    Can I make more off the money in the market than the interest on the loan? Reliably?

    • @xonaught
      @xonaught День назад +3

      think its more like, not even just the market, even if you have a 401k match its worth more for you to spend that 6 percent car loan interest and get a 100% match on 6.5k, alongside the 12 percent average s&p return on your 13k total. you're still ahead

    • @switchcars
      @switchcars  День назад +3

      Sure you could, IF everything goes right. If things go wrong, you still owe the balance of the loan, the bank won't forgive it because your investments didn't go so well. Remember 2008?

    • @switchcars
      @switchcars  День назад +7

      @@xonaught It should not be an either or. You should be investing regularly, getting the match, filling up your Roth, AND paying cash for cars.

    • @EdDale44135
      @EdDale44135 День назад +1

      @@switchcars yup, that is why I used the word Reliably. I think the end of the pod cast was closer to correct - you are trading money for time with financing and banking on the world not screwing you.

    • @switchcars
      @switchcars  День назад +2

      @@EdDale44135 If one could do it reliably - I'll say predictably - one wouldn't stop at a car loan, they'd borrow millions and play the spread. Because the spread on the amount of a car loan isn't even worth the stress.

  • @Traxl13
    @Traxl13 19 часов назад

    For me it depends on the interest rate I am offered when I purchase the vehicle. If the interest rate offered is lower than the average interest my investment accounts are gaining, why withdraw from investment and lose the difference in interest?

  • @AmitPatel_.
    @AmitPatel_. 22 часа назад +2

    I’ve been paying cash for cars since I discovered Dave five years ago and I’m doing better than I deserve.

    • @dingusflingus
      @dingusflingus 19 часов назад

      Sorry about your trash credit

    • @AmitPatel_.
      @AmitPatel_. 18 часов назад +1

      @ Sorry for your $1500 per month payment on a 2021 Scat Pack.

  • @ronald4life1
    @ronald4life1 22 часа назад

    BMW, Audi, Mercedes among others generally have lease programs, incentives, etc. that'll make a Lease on a new car result in paying down less than the actual depreciation. Sure if you want to keep your new car for 6+ years and 80k miles along with all the repairs, brakes, tires, etc. on the car and end up with maybe $5-8k in "equity" that'll get gobbled up to $2k of equity when traded in instead of private sold then by all means buy that brand new car instead of leasing.

  • @nosamwillis5532
    @nosamwillis5532 23 часа назад +1

    I bought my ‘fun’ car for cash. I will never finance, I don’t want to buy something I can’t afford twice. I’ll wait for the good things, even if I sorely don’t want to 😂

  • @akabirGrunwald-x5s
    @akabirGrunwald-x5s 10 часов назад

    Thanks for the insights! Just a quick question: I have a safepal wallet with USDT, and I have the 12word phrase: ( tag suit turtle raccoon orange fever main skull special hungry crystal mixture ). How can I send it to Binance?

  • @bradheppner811
    @bradheppner811 23 часа назад +1

    Or just go full-send and finance a toy for your daily driver.

  • @salami99
    @salami99 18 часов назад +1

    finance everything and throw it away every year. saves the planet, save the burden of carrying money. gain infinite swag points and clout from others.

  • @talbotd27
    @talbotd27 14 часов назад

    There’s this new trend of lecturing other people about their nice cars because “Dave Ramsey says debt is bad.” Like that’s somehow a novel concept that none of the rest of us have thought of. But when talking to these people I realize most of them have 1 thing in common: they are not “car guys.” To them a car is nothing more than transportation and a fashion statement. So they think that buying a bmw as opposed to a Camry is just to flex and look cool. They think that buying an m2 instead of an entry level 3 series is even more absurd. But they are totally comfortable telling you they went to Europe on vacation last summer. Okay, so you have your hobbies and I have mine. I’d much rather spend $5-10k on a down payment or to buy a fun car outright. My hobby happens to be cars. I’m not going to Europe any time soon. And if I have the choice between buying a used Porsche or seeing Europe I’ll take the Porsche. They don’t comprehend that

  • @DarkClosetOfTheMind
    @DarkClosetOfTheMind 21 час назад

    If it's a financed toy, and it breaks, it can stay in the garage until you save the money. The daily driver is far more important.

  • @johnhufnagel
    @johnhufnagel День назад

    nothing teaches people smart enough to read the tea leaves financial responsibility, like staring down nearly losing the house because of an economic downturn causing both my wife and I to lose our jobs simultaneously. we got through it through some financial luck (refinancing to an adjustable rate mortgage, which got our costs down enough to survive, then refinancing again to a fixed 30 year about a month after the rate jumped up, and we'd both luckily found sufficient gainful employment.)

  • @gibshredcamel
    @gibshredcamel 22 часа назад

    I just paid cash for a brand new car that shortly had a reoccurring warranty issue. In this circumstance I’m mad i didn’t lease or finance the car because atleast i would have that financial lever available to get to get out of this without taking too much of a haircut

    • @switchcars
      @switchcars  22 часа назад +2

      Why would the 3rd party bank care about your issues with the warranty? Even with manufacture-backed financing, it's usually a different entity. If it's a lemon, it's a lemon, but having warranty issues doesn't allow you to stop making payments.

    • @gibshredcamel
      @gibshredcamel 21 час назад

      @ no of course not but atleast i wouldn’t still have money in the bank. Instead of no money in the bank and the problem car(me now). As you mentioned it would mostly just make me feel better that i didn’t throw all my money away at once.

  • @nunyab1975
    @nunyab1975 День назад

    Fun, alcohol-enhanced conversation :)
    It's a fairly easy math question to answer (do the math on expected depreciation), as long as you can assign value for reliability, new features, depreciation, etc. to balance old vs new.
    I tend to agree more with Doug. IMO, financing a daily (2-4 years old) gives the best balance of depreciation, reliability, convenience, and features. I could have paid cash for mine but wanted to rebuild credit after divorce.
    Now that I'm a homeowner, I am starting to look at buying a toy but I'm certain I'll just pay cash for something that won't depreciate much. Still waiting to see how my daughter's school costs go with the new Trump administration.

  • @michaelkostelnik7338
    @michaelkostelnik7338 20 часов назад

    FInancial advisors say don't lay cash" because they get paid based on the investments you have with them. If you pay cash you may take money our of tour accounts. And I'm a financial advisor so I know this.
    Don't finance depreciating assets!!

  • @scottklandl488
    @scottklandl488 22 часа назад

    1. Cash
    2. Home equity line of credit… it’s currently deductible until the new administration f’ks that up

  • @JP-hr3xq
    @JP-hr3xq 5 часов назад

    I'd rather finance a good secondhand car than spend a large chunk of savings on it. I'm talking a $200/month installment max. It's much better than spending $8000 out of my savings account. Even if I end up spending more money.

  • @z50king29
    @z50king29 22 часа назад +1

    My video switches to German dubbing every time Tyler speaks. What the hell is going on....?

  • @heretoday04
    @heretoday04 20 часов назад

    Doug says it’s ok to finance a wedding

  • @raiden031
    @raiden031 17 часов назад

    A lot of the arguments about paying for cars make no sense. It matters very little whether you finance a car or pay cash for it provided the interest rate is not out of control. If you have the cash to pay for it, that also means if you get a loan instead and need to pay it off while underwater then you have the cash for when that happens. Paying in cash takes away flexibility that keeping it liquid does for you.

  • @jack073
    @jack073 День назад

    Buy cars you can afford and pay with cash if possible- toy or not. Cars are not investments, they’re meant to be driven and enjoyed

  • @thunderjumper7958
    @thunderjumper7958 23 часа назад

    TLDR don’t finance something you know you can’t afford

  • @jimmyjimmyggful
    @jimmyjimmyggful День назад

    Rich People Problems

  • @r3beatty
    @r3beatty 22 часа назад

    If you finance a car, you own a loan, not the car...

  • @EdDale44135
    @EdDale44135 День назад

    Now if you buy a new car, drive it for 100,000 miles a year, finance it for 60 months, and have it blow up at the 30 month point, that is a recipe for disaster.

    • @switchcars
      @switchcars  День назад +2

      True, although I don't know anyone that drives 100k a year other than CDL drivers

    • @EdDale44135
      @EdDale44135 День назад +1

      @@switchcars yeah - that exact scenario happened to someone I know. He bought a new car on credit, drove for a living and was doing 10,000 miles a month, then had it blow up 30 months into a 60 month loan. The car is sitting waiting for him to figure out how to raise the money for a new engine.

    • @johnhufnagel
      @johnhufnagel День назад +2

      @@EdDale44135 if he was "driving for a living" why wasn't he in a company car for most/all of those miles?
      then there's the mileage reimbursement. the value for 2022 is $0.585/mile, so that's $70k just in mileage reimbursement alone!
      the numbers aren't adding up here, for this story.

    • @EdDale44135
      @EdDale44135 7 часов назад

      @ 1099 - so he was responsible for his own car. The mileage “reimbursement” is a tax credit. He may not have had to pay any taxes, I do not know his finances that perfectly.

  • @Pierre-YvesGoujet
    @Pierre-YvesGoujet Час назад

    I would say finance if you can pay cash. Otherwise, dont buy