The Worst Investing Mistake You Can Make

If you’ve ever assumed a car loan is no big deal, think again! I'm unpacking the major cost a car loan can have on your wallet and sharing smart tips to help you own a vehicle without it owning your finances.

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[josephkelleher]

I agree that buying a used car is the best thing to do financially but it can come with a lot of hassles. First off most people don't maintain their cars well. You have to get the used car inspected thoroughly by a private mechanic and even then that is no guarantee that he will catch everything wrong with the car. That's why I prefer paying cash and buying new. The difference with me is I always keep the car at least 15 years and preferably longer. I have been doing it that way for the past 45 years.

[rodneycarpenter]

The quality of what you buy makes a huge difference. Toyota and honda are two of the best in my humble opinion.

[Markogorkis]

A question that could have been asked is, "Why has the U.S. market wildly outperformed just about all other stock markets in the world?" Will this continue? I'm dumping my developed markets and emerging market index funds because their returns have been garbage next to U.S. market returns. And I've had those funds for over 10 years, so the U.S. outperformance is a long-term phenomenon.

[matthewpiatt]

Thanks to finding the Ramsey plan 15 years ago, I’ve only ever bought used cars for under $20K, all in cash. I have no debt except my mortgage, which is almost paid off.

[tduck]

Thats why I'm still rolling in my 09 car. I bought it brand new but I bought it for the long haul.

[edwinroyal]

No one should consider their cars as investments. They're either a necessary depreciating asset or merely toys, depending on what you use them for.

[diydarth]

Cars and houses are lifestyles, not investments.

[loganwamer]

I like the idea of having no car payment, but the reality is getting rid of my car payment just means I get to eat enough food a day. It's still worth doing, but its not really going to help me financially.

[josephkelleher]

In my opinion a car IS NOT an investment. In fact I don't believe a vehicle is an asset. I classify a vehicle as a depreciating liability.

[AnaGfit]

My family convinced me to lease a car and my ex at the time was so against it. I will admit—he was right. Now I ended up having to drive way more than expected, so reliability was good, but def went over mileage and it was way too expensive for what I made.
I have to buy it out now and luckily I was able to extend it so I can pay it off, but next time only certified used. 🤞🏼

[tonyad]

Food depreciates 100% in days. What do I do about that? And you lose “a little” money in mortgage interest? Have you seen the rates lately? 15 years you’re paying 60% in interest alone. 30 years, 150%. You’re paying double the price and then some

[freedomring]

A car is not an investment. With that said, you should own your car outright. You shouldn't have a car payment at all.

[rollercoasterob]

My wife and I enjoy these short videos from RS. We are beyond the metric you discuss for buying a new car but still can not stomach the depreciation and loss of investment capital. We try to find reliable vehicles (Toyota, Infiniti, etc) that have plateaued after their steep initial loss.

[maya.the.earthling]

Me sitting here on a paid-off Toyota my parents bought in 2006… this is like when people advise I should cut out soda to lose weight. I don’t drink soda, ever. 😅

[davelively]

If you are paying cash for a car don't expect a good deal. Most car salesmen think cash is trash. They make more money from financing and selling extended warranties than they do from actually selling cars these days. Just as credit card companies consider people that pay in full every month deadbeats car dealers are not fond of cash buyers. The dealer gets paid from whoever is giving the loan and its easier to upsell people only concerned with a monthly payment add-ons like extended warranties, service plans and other extras. A lot of incentives car makers offer now consist of special financing offers with no option of getting a discount instead. I still pay cash but its frustrating that paying cash makes car buying even more of a hassle than it usually is.

[MrWookie]

By this line of thinking buying anything that could be replaced by something cheaper is dumb. But I bet you she buys steak over pork sometimes or flavoured beverages of water. How about her nice décor in the background which serves absolutely no purpose whatsoever. Almost everything loses value when considering opportunity costs. At some point you have to include your own happiness in the equation. Yeah my M5 will lost monetary value over the years but the smile on my face when I drive it is worth something too.

[Ericevans]

Great video! I really do have a question. For someone with less than $5, 000 to invest, how would you recommend we enter the market? I am looking at studying some traders and copying their strategy rather than investing myself and losing money emotionally. What’s your take on this approach?

[eandrgoodwin]

$50K 60-month loan at 7.5% costs just over $10K in interest alone!
4 years ago you could get a 2% loan.
$50K 60-month loan at 2% costs just under $2.6K in interest.

[thecomity]

A car is not an investment. It is a tool. My last car was paid off within one year and I drove it for 17 years. Yes, I have a loan on my new royota but it will be paid off within 2 years and I intend to drive it for many years.

[TheAngryBrownsFan]

That truck payment is fake. He would have to had gotten an 85, 000 loan for 84 months at a 25% interest rate and put nothing down for that much interest. Maybe he did. but 90% of the internet is fake