The Personal Finance Podcast - 11 Car Buying Mistakes you Need to Avoid! (Don't Make These Mistakes!)

Episode Date: July 3, 2023

In this episode of the Personal Finance Podcast, we're gonna talk about 11 car buying mistakes you need to avoid. How Andrew Can Help You:  Join The Master Money Newsletter where you will become smarter with your money in 5 minutes or less per week Here! Learn to invest by joining  Index Fund Pro! This is Andrew’s course teaching you how to invest!  Watch The Master Money Youtube Channel!  Ask Andrew a question on Instagram or TikTok.  Learn how to get out of Debt by joining our Free Course  Leave Feedback or Episode Requests here.  Thanks to Our Amazing Sponsors for supporting The Personal Finance Podcast. Chime: Start your credit journey with Chime. Sign-up takes only two minutes and doesn’t affect your credit score. Get started at chime.com/ Shopify: Shopify makes it so easy to sell. Sign up for a one-dollar-per-month trial period at  shopify.com/pfp Policygenius: This is where I got my term life insurance. Policygenius is made so easy.  +To get your term policy go to policygenius.com and make sure your loved ones are safe. Factor 75: Head to factormeals.com/pfp50 and use code pfp50 to get 50% off your first box. These are amazingly easy and nutritious meals.  Links Mentioned in This Episode:  How Much Should You Spend on a Car? (My Answer May Surprise You!) How You Can Have a Free Car for Life (It's True!) Connect With Andrew on Social Media:  Instagram  TikTok Twitter  Master Money Website  Master Money Youtube Channel   Free Guides:   The Stairway to Wealth: The Order of Operations for your Money  How to Negotiate Your Salary  The 75 Day Money Challenge  Get out Of Debt Fast  Take the Money Personality Quiz Learn more about your ad choices. Visit megaphone.fm/adchoices

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But finding the perfect car can help you get the most out of life. Like the SUV that handles everything from drop off to off-road, and the car that hulls groceries and hockey teams, or the van that's gone from just practical to practically family. Whatever you want, wherever you're going, start your search at autotrater.ca. Canada's Car Marketplace. On this episode of the Personal Finance Podcast, we're going to talk about 11 car buying mistakes

you need to avoid. What's up, everybody, and welcome to the personal finance podcast. I'm your host, Andrew founder of MasterMoney.com. And today on the Personal Finance Podcast, we are going to be talking about 11 car buying mistakes you need to avoid. If you guys have any questions, make sure to hit us up on Instagram, TikTok, or Twitter at MasterMoney Co, and follow us on Spotify, Apple Podcasts. or whatever podcast player you love listening to this podcast on.

And if you want to help out of the show, leave a five-star rating and review. I cannot thank you guys enough for leaving those five-star ratings and reviews. They truly mean the world to me. Now, today, we're going to be talking about these 11 car buying mistakes that you need to avoid. And I'm so incredibly excited to do this episode because cars are a big detriment to our society, specifically people who are not building wealth, typically spend too much of their net worth on cars. So what I want to do today is go through some of these car buying mistakes that you need to avoid.

Some of these are very actionable and tactical. So if you are looking for a car or if you think you're going to be buying a car in the next couple of years, make sure you listen through this episode because a lot of little things that you need to avoid that can cost you tons of money over time. Now, if you haven't heard our episode where we talk about some of the million dollar money decisions that you need to be focusing on, transportation is one of the big three items that we love to talk about here on this podcast. because if you can reduce the big three costs, which are housing, transportation, and food,

then you can likely spend lavishly on everything else in your life that you truly, truly value. And so making sure you control this cost of transportation is going to be imperative for your wealth-building ability, especially very early on. The person that drives the fancy car nowadays, every time I see them, I think, man, they probably are not as wealthy as they try to look going forward.

And the reason why I think that is from a book called The Millionaire Next Door, and it shows most people who drive luxury cars actually are not that wealthy. They don't have many assets. Maybe they even have a high income, but they do not have much assets, which means they are not actually wealthy or rich. Instead, the majority of the time, they're actually just spending everything that they make. And so changing your money mindset and understanding how these mistakes can actually impact your bottom line is a very powerful thing. And so we talk about how much it actually costs you to own and maintain a car in that episode. And obviously, I'm not recommending that you go around town riding a body. or taking a golf card out or whatever else, what I'm talking about here is just know the implications of what owning a car costs. Because I'm going to own a car forever. Most people are not willing to walk around town. And so making sure that you just know these costs are really, really important.

In that episode, we even talked about the costs up front. And then we also talked about some of the costs that are associated with buying a car. And so today we're going to be talking about some of these things about buying a car. Now, at the time recording this, it is a very difficult time to buy a car. There's a number of reasons for this. There's not a ton of supply going around. A lot of people are having a hard time with supply.

Prices are significantly inflated. Used car prices are really, really inflated, and interest rates are pretty high. So between all of these factors, it's going to increase the amount that you have to pay for a car. So hopefully some of these things that we talked about today are going to be able to help you and are going to be able to give you kind of a guideline

as to some of the things you need to look out for as you buy a car. Now, we've also had some other episodes about, buying where I talk about, you know, if you want to be financially independent, here's how much of your income you need to be spending on a car. So I will link those up in the show notes down below and make sure we have those available for you. In addition, when we do this, we want to make sure that we are buying these cars right. And we're going to talk about some of the things that you need to be doing in this episode. So without further ado, let's get into it. Now, number one is one that may cause controversy for people within this wealth building community

of the personal finance podcast and master money. And number one is the first thing. The first you don't want to do is put a small down payment or none at all. Now, the argument back is going to be, well, I'd rather take my cash and not put it into a depreciating asset. I'd rather put it into other assets. But here is the question that I want you to kind of think through is if you're going to put a low down payment down or what a lot of people do is no down payment at all, especially if they get a really good interest rate. What I want you to think about is what's going to happen when you become underwater in this car. So say, for example, you go out and you buy a brand new car for $30,000. Well, immediately, that car is going to lose about 20% of its value when you drive it

off of the lot. Now, this is just the law of depreciation when it comes to cars. It literally loses value the second you drive it off the lot. So when you go out and you buy a car, that car is immediately losing value. So then all of a sudden, you have a $30,000 loan on a car that is now worth $24,000 the second you drive it off the lot. You are now underwater when it comes to this vehicle. This is why one of our rules that we have now is we want you to make sure that you are putting skin in the game. You have money down on this car. The reason for this is so that you are not underwater when you drive off the lot. Because what would happen if three months down the line, you get in an accident, and even if it's not your fault, that car is completely totaled.

You cannot utilize that car anymore. Well, guess what's going to happen? They're still going to want their $30,000 back. And so the car is only worth $24. The insurance company gives you $24. in the hole of $6,000. And I have had friends who have had this happen to them. And so this is something where to avoid this situation, you have two options.

One, put a down payment down, and your down payment can still be your trade in value. So say, for example, you trade in a car and it's worth $8,000 for example, then your trade in value is a down payment. And or, number two, is you get something like gap insurance, where if you're going to put no money down, looking at something like gap insurance is going to help you at least cover that basis for that time frame. Now, where do you get gap insurance? Typically, you go to your insurance provider, talk to them about those costs associated with gap insurance. I've seen it really low, but it depends on what type of car that you have because luxury vehicles that depreciate very

quickly are going to have much higher gap insurance than maybe something like a Honda, a cord, or a Toyota Camry, which does not lose its value as quickly as some other vehicle. So gap insurance is going to cover the cost between the depreciation hit that you take and the price you have. You of your loan. So not putting enough down is something you definitely don't want to do. And if you do do it and you believe in only putting your money into assets, then I would at least have that gap insurance available. Even if you follow some of the car buying hacks that we've talked about where if you're like a real estate investor, for example, you can go out, you could buy a rental property that cash flows the same amount as it does for that car payment. And when you do that,

then you have a free car for life. And then once you're done driving the car, you still have that asset in place. Well, at the same token, you're still going to need that gap insurance, even if you want to put zero percent down because you have those monthly payment. It's covered. So this is just something you really want to think about and consider as you go through this process. But putting down a small down payment, you need to know the repercussions and you need to take advantage of these so that you do not get yourself in a sticky situation.

That's why we always talk about making sure that you put at least 20% down when it comes to buying a car. I don't love putting 20% down on any depreciating asset, but you're going to have to do it so that you don't get underwater because accidents happen. In fact, accidents are increasing now with the use. use of cell phones while people are driving and impairment and all these other things. So you have to make sure that you are covered for these types of things, especially if you buy that brand new car.

And if you have a luxury vehicle, guess what? That thing is depreciating way more than I just said when you drive it off the lot. Luxury vehicles significantly depreciate, which is why it's better to buy them one or two years used. Number two, along these same lines is not understanding the factors that can make you go underwater on your vehicle. So number one is not putting enough down can make you go underwater on your vehicle. A lot of people are driving vehicles that are worth less than they are actually paying for them right now.

This is a huge problem in the 2007-2008 housing crisis where people had all these mortgages they were holding and the house was worth way less than their mortgage. And that's why so many people were defaulting on these mortgages. But right now people are driving cars left and right that are worth less than what they actually paid for them because they depreciate so quickly because prices are so inflated. So what's happening here is that when this happens, you have to look at some of the things that are going to come. cause this to happen and understand how to combat against that because I don't want anybody here losing their path to wealth because they're underwater on a depreciating asset. Let me say that again. I do not want anybody listening to this podcast losing their path to wealth, getting thrown off their path to wealth because you bought a depreciating asset because you thought

it was going to look cool. Now, in a lot of circumstances, maybe financially the only path you can take is to finance. And I understand that. I completely understand it. It's a tough world out there right now. But at the same token, you have to be educated as to why this could happen. So small down payment is number one. Number two is long loan term. Stretching out your loan term can cause that to happen because over time, you're not really paying down that principle very quickly. Number three is high interest rates. So right now it's a dangerous environment because interest rates are higher. Now, as interest rates start to decrease below six, five, four percent, then it becomes safer and safer to have those auto loans. Rolling over previous

car loan debt into new car loan debt. We'll talk about that more later on. Depreciation faster than loan payoff, which is the big one we just talked about. Your car is going to depreciate really, really quickly right now, especially if you're overpaying or paying inflated prices. Buying a car you can't afford is another way because you're not paying down that principle fast enough and then paying only the minimum amount when you start to pay down that car. So consider some of these things that cause you to go underwater. I do not want you underwater on your loans, you need to have some skin in the game, and make sure you do a trade-in if you have a trade-in car available. If you're a car person and you're like, I want to just collect a bunch of

different cars, but you're underwater on some of these things, and you really need to reconsider how you're doing this. Now, number three is not having a budget. A lot of people go into buying a car and they think about something different, which is their monthly payment. I'm going to tell you why later on, why you do not think about your monthly payment. And instead, you need to have a budget in place. So when you think about the budget, obviously, number one, most people think about is the purchase price and your budget needs to have a limit to it where you're not going a single cent above that limit. Number two, though, is you need to budget out that down payment because you have to have that down payment available and you can look at the blue book value of your

vehicle to understand, hey, maybe I got $6,000 for my used car that I'm trading in, so I need to put another $5,000 or whatever it is to get to that 20% mark so that I can make sure I have some skin in this game. Three is sales tax. Depending on what state you're in, sales tax is massive. time I buy a car, I feel like I'm paying three, four, $5,000 more than what the actual sticker price is because there's taxes, there's fees, all those other things. The fees you can negotiate, taxes, you cannot. So making sure that you have this in place and you're looking at some of these additional costs and you factor those in because it can take you way over your budget. You really need to go a couple thousand dollars below your budget in order to actually hit your budget.

The next thing is your interest rates. You want to factor in some of these loans and call up ahead of time to some places where you want to get your loan. You can go to your local credit you need and ask them what their interest rates are. Some of them have had some better rates I've seen as of late locally for me than have some of the dealerships, but sometimes you can negotiate a better deal at the dealership and then refinance out later if you can think about that. Then maintenance and repairs. Now let me tell you a little story here, my friends, because if you own a luxury vehicle, Mercedes, BMW, all the fancy pants cars, if you own a luxury vehicle, you are going to be paying a ton of money in maintenance and repairs. And it's going to be way more than you actually

think it is if you've never driven one before. Let me give an example. A Mercedes oil change every single year is like $1,000 just to get your oil changed every single year. How do I know that? Because we have one in the driveway. They are very expensive to maintain. In fact, I will never buy a luxury vehicle again because of some of the costs and the maintenance costs that come into play. If you blow a transmission in something like a Mercedes or a BMW or something along those lines, it's going to cost way, way more than it would if you blew a transmission in my Ford truck, for example. So my Ford truck is really, really easy to maintain, whereas something like a luxury vehicle is really, really costly to maintain. So the difference between the two is massive,

especially if you are looking at luxury vehicles. And I see a lot of luxury vehicles on the road today. so making sure that you think through that is very, very important. Same thing for luxury vehicles. Just to get your tires replaced is like $1,000 every single time. Break pads, for two brake pads, is like $1,000 every single time. I mean, all this stuff is truly going to add up over time, in addition that you pay more for the car and it depreciates very, very quickly. So this is something where you've got to think through how you're going to spend your dollars

as you go through this. Fuel costs is another one. So does the car require pre-eastern? gas. Well, guess what? And those luxury vehicles, they require premium gas. In a standard vehicle, they do not. So you got to think through, well, what is that cost differential going to be for me in the future? I'm not just buying the car so people can look at me and think I'm wealthier than I am. I have to actually think through some of these costs. So make sure you have that budget in place. You understand what each thing is going to cost. Put together yourself a little old-fashioned

spreadsheet. You can get those together pretty quickly. Just make sure you're doing your due diligence here because this is really is something that can kill your wealth building ability if you do not take this very very seriously number four is buying new when used would do how do you like that rhyme buying new when used would do so a big factor for me and one thing that i always do and even with our mercedes i just talked about in the driveway my Ford truck that we have in the driveway we always buy used and we usually buy them one to two years used so that they actually take that depreciation hit. And in fact, the depreciation hit that you can save on some of these things is absolutely crazy. Now, we bought our cars a few years back before the run-up of cars actually happened.

And now our cars are paid off. We're going to drive them until they completely die, especially me because I do not care as much. All I want is just to have a truck and I'm happy. So for a lot of other people, though, if you're a car person, maybe you're switching out cars at the time. And so you have to think through, if I buy slightly used, it already takes that massive depreciation hit that happens in year one, two, or three. And now what I can do is I can have a car that is way cheaper that most people paid way more and it doesn't take that as much of a depreciation hit every single year because the majority of the depreciation hit is in the first three to five years depending on what type of car it is. And so looking at slightly

used is a really cool way to do this. So for example, let me give you a great example of this. I bought my truck and it had 13,000 miles on it. You know what it was for? It was a truck that was leased at the dealership so you know the maintenance was taken care of because you have to take care of the maintenance when it comes to leases. And it already took the depreciation hit, and I paid 30% less than I would have if I just bought one year newer with 13,000 miles on it. So this is something where if you can find cars like this, maybe they've been leased for the last couple of years, then they're at least really well maintained because the dealership takes care of them, because they know they're going to get a hold of them afterwards and have to go sell

those vehicles. So that's another thing to kind of think through as you go through this. But I have always bought slightly used cars. I've never bought a new. car in my entire life. So this is one thing where really look at some of these used cars because you can get better deals sometimes on these used cars. Now, at the time recording this, used cars are super, super inflated. So if you weren't looking at a comparable car and there's like a $2,000 difference between the brand new car and the one year used car, obviously that's an easy choice. But if there is a comparable difference between a three year used car and a brand new car and it is like $15, $20,000, that's also an easy choice.

So between those two situations, you just want to make sure what are the comparables and kind of think through that, even if the financing is different because the financing on a car is not going to absolutely destroy you as would financing on a mortgage or something else. You have to kind of run the numbers on this and see what's the difference every single month? Is it just like three bucks a month where I'm going to have a little bit of a higher interest rate, but I'm paying $20,000 less? And so you just got to run the numbers on some of these as you think through this. I do not want you taking interest rate only as your reason for buying a brand new car. because usually dealerships are going to give you a much lower interest rate to buy a new car because they want to move that new inventory. But at the same time, looked at used, even if you have to pay one to two points more on your interest rate, run the numbers to see what the difference is, and then you can make your decision based on that.

Now, number five, along these same lines is if you buy a used car, skipping the pre-purchase inspection. The last thing you want to do is buy a limit because the way to combat this is to get a pre-purchase inspection. Now, these are becoming way more common now because there's agencies out there that can help you with these pre-purchase inspections that you can just call up and they will send a certified mechanic out there to go out and look at your car. And this is a third-party person that's going to come out and look at your car and look for any potential issues that could come up inside of your car. So the first thing you do is you just call up a qualified inspector. So there's a lot of qualified inspectors out there. You make sure that they're qualified, not just some random mechanic. and you go out there and they will come to your location for like 150 bucks and inspect the car.

And then obviously you want to get permission from the seller and then prepare the car. So you want to make sure that when they prepare the car, it is not already warm and running and it's been running for a little while. You want to make sure that car is starting up cold, completely cold, so that they can inspect everything, how it starts up, how it warms up and looks through all the engine, the transmission, the tires, the brakes, everything throughout that car to make sure everything is working properly. And they're going to check all kinds of stuff from the exterior, the interior, under the hood, under the car, all these different things. And it's really worth it, especially if you made your final decision. I'm going to buy this car as long as everything checks out with my inspector, $150, boom, out the door. That could save you thousands and thousands of dollars if that car has something wrong with it.

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Six is not doing enough research. So it is essential to do research on the vehicle when you go and look at a vehicle. So say, for example, you're out on the dealership and you're looking at a specific type of car. You research this car and you're out looking at the car. And then all of a sudden, you see a different type of car that is very similar to the type that you're looking at,

but it is a souped up edition, looks way better, and has a way better price than the car that you're actually looking at. And you go out and impulse buy that car without doing any research whatsoever. That is the last thing that you want to do. You want to do as much research as you possibly can. A, you want to research things like recalls, for example.

A lot of vehicles out there are reduced in price because they have a lot of recalls. You want to make sure that you understand that so that you're driving a safe vehicle. B, if you have kids, safety ratings are everything. Every parent knows this. You're going to end up upgrading your car if it's not a safe car when you have your first child.

And so having these safety ratings upgraded is going to be an integral thing that you want to look at. Three, the integrity of how much you have to have repairs and all these different things. What are the repairs cost? How much are they going to cost me? How much is fuel going to cost me? All of those various things. And then you want to look at insurance costs because insurance is going to fluctuate from vehicle to vehicle. A luxury vehicle may cost you $100 more per month, depending on what it is,

then would just a regular standard vehicle. So you got to make sure that you were thinking through some of these things. Toyotas, Hondas are all well known for long lasting cars, low fuel issues, and low maintenance issues. And when you do have maintenance issues, they have low cost. Those are all vehicles that are going to last a very long time. So these are just some of the considerations I want you to think through as you do your research. Number seven, now this is a big one. And this is one that the majority of people out there do.

And if you do this, I want you to change your mindset completely. I want this podcast episode to literally flip your mindset when it comes to this. It's focusing only on the monthly payment. Now, you'll notice something very quickly. Car dealerships try to find your monthly payment that you want to pay up front. Why do they want to do this? Because this is where they get you. Now, I want you to remember this.

The middle class focuses on monthly payments. The rich focus on total cost of ownership. Let me say that again. The middle class focus. on monthly payments, the rich focus on total cost of ownership. You should never say how much are the payments because that is how I can tell if I can afford it. That is absolutely wrong. It is the wrong way to think about buying something because car dealerships can stretch out your payments as far as they possibly can to make it as low as they possibly can. And guess what's going to happen to you?

You're going to be paying way more money for that car over that time frame than you need to be. And when they start to stretch out those monthly payments, that's when they start to get you. All of a sudden, you're paying 96 months for a car. I want you to keep that 20% down and I want you to reduce your monthly payments to ideally three years or less. Why? Because that means your total cost of ownership is going to go down significantly than someone who stretches it out for six years or something along those lines. So you got to think through total cost of ownership. If you don't know what total cost of ownership is, I will talk through it now.

Now, AAA talks about this, and they do a study every single year. And last year they had a study come out of total cost of ownership, and they said that the average person spends $9,56, or $796 every single month in their car. How do you calculate total cost of ownership? This is very important to understand. Number one, and this is the greatest impact, and this is what trips most people up. I've talked about this a number of times on TikTok, and I get a million comments back from people who say, there's no way I spend that much every single year.

Here's why, because the invisible costs that you have associated with your car, some of the invisible costs are depreciation. Your car is depreciating every single day that it's sitting in your driveway. Your car depreciates every single day. You lose value on that car every single day. That is why I absolutely hate cars because they lose value every single day. I want to buy as many assets as possible instead of liability. like cars. This is another reason I don't even factor cars into my net worth whatsoever because they lose value every single day. Why would I put something that loses value every single day into my

net worth statement? I should probably consider the same for crypto. So this is something where so this is something where you have to make sure that you understand that your car is depreciating every day. Number two, interest on financing. It's another cost that you have to factor in. The longer you draw these payments out, the more interest you're going to be paying. Insurance is the third cost. That's going to be something where you're going to have to maintain that car and pay this insurance every single month or every six months or however often you pay insurance. Then there's fuel, maintenance and repairs, registration and taxes, and then other fees. All of these associated are the total cost of ownership of your vehicle. If you buy a Toyota Corolla, the total cost of

ownership is significantly less than if you buy a G-Wagon. So the total cost of ownership you could pay $30,000 for something like a Toyota Corolla for total cost of ownership, or you could pay $300,000 for something like a G-Wagon. You've got to understand the difference between total cost of ownership that makes sure that aligns with your financial goals. If you're not hitting your investment goals and you're buying luxury cars and things like that, you need to change your mindset because total cost of ownership is going to kill you if you do that. Number eight is you take on long-term loans to lower these monthly payments.

This is a massive, massive mistake that most people, do because they want their monthly payment lower and they think about this. Well, how can I plug this car into my monthly lifestyle by having monthly payments? Now, I feel for you. Some people, if you're living paycheck to paycheck, you just need something to get from point A to point B. You're buying a 10 year old used car and you have to stretch out those monthly payments because you don't have enough money to cover it and you just need to get it to working back and you're paying $10,000 for a car. You're in a different situation than people who I'm talking about here, who I'm talking about here, who are stretching out these monthly payments

are folks who are buying more car than they need. They're stretching out these monthly payments and it's really inhibiting their ability to build wealth. A lot of people cannot build wealth and then we find out their car payment is $1,000 per month. On TikTok, you see all these car dealerships who are promoting $1,000 plus per month car payments

and they're making it sound like it's a cool thing to do. This is a major issue that you've got to combat against. Do not stretch out your car payments. Keep it three years or less if you possibly can at the very max four years because reducing that is going to reduce your total cost of ownership over time. Number nine is not checking your credit before financing. So when you go into the car dealership, one thing you want to do is do a soft pull of your credit report. And the only reason why you want to do that is if you're not really sure what your credit is, because your credit is

going to have a major impact on how much you pay for that car over the long run. Because if your interest rate is three, four, five points higher, you get a really high interest rate loan because you do not have a good credit score, then you may want to consider saving up and paying cash for a new vehicle. If you have a bad credit score, I would much rather you buy a $10,000 car cash than buy a $40,000 car that you really, really want on financing, because that $40,000 car is going to cost you $55 by the time you're done paying down that car, especially if you stretch out those payments. So making sure that you understand what your credit score is, and this is why credit score has a six-figure impact, if not seven-figure impact, depending on how much money you're

spending and how much credit you're borrowing on your entire life because of this. And it takes away from your opportunity cost with that money as well. Number 10 is rolling old car debt into a new loan. Now, my friends, I'm seeing this way too often and I looked up a bunch of data on this and it is happening all the time now where people are underwater on cars because they're buying a car way over price and they decide, hey, I want a new car and they sell their car. And so they have an old auto loan that is not completely paid off because their car was underwater. And now they're taking on a new auto loan. They said, you know what? I'm just going to roll this over into the new auto loan. And all of a sudden, this starts to grow over time. And as you start to do this, you start to have a massive car payment

because you're rolling old auto loans into new auto loans. This is a very, very risky thing to do. Number one, it increases your auto loan. Number two, it puts you underwater on your loan completely. if you're rolling in an old auto loan to a new auto loan, you're completely underwater, meaning you didn't put anything down whatsoever and you're adding to the amount of debt that you already have. You are completely underwater on that auto loan. Number three, it gives you higher monthly payments, which makes it much harder to build wealth and invest your extra dollars every single month. Number four, you have longer loan terms because you can't afford the monthly payments. You have to stretch it out even longer.

Number five, it increases the total cost of ownership like we've been talking about this entire episode. And then number six, it puts you at risk of repossession because people who do this two or three times typically have repossession issues after the third time. So you have to make sure that you are reducing that. And then number 11, this is the last one, is buying extras that you don't need. Listen, I know what it's like to be at the dealership.

You are looking at fancy schmancy new cars or new cars that you were dreaming about being in the next couple of hours. And then all of a sudden, they show you the upgraded model, but this one, you don't even have to push a button to open the trunk. You can just wave your foot underneath the car and the trunk opens up, but it's only an extra $7,000. And people are like, oh, that's not too bad. But really, in reality, think about what you're doing here.

You're paying $7,000 so you don't have to push a button. Instead, you can wave your foot underneath the car. These are the types of little features, and this is a drastic example. That's probably not true. But these are the types of features that you're thinking through where you're paying an astronomical amount of money to add little things to a depreciating asset that do not matter. When I bought my truck, one thing I did was I looked at the difference between a bunch of other trucks, and I noticed once you added specific features, all of a sudden the price of the truck jumped $10,000.

So say, for example, one big thing was if the truck had leather seats inside, all of a sudden, the price of the truck jumped up to $13,000. Well, I got some quotes and figured out, hey, I could put new leather inside of this truck for $2,000. So what if I just did it on the back end? The same thing goes if you had like the upgraded sound system where you had all these different little pieces that you really could change on the back end. If you can change some of these in the back end

and you really, really, really want it, like you really want it. Drive it for six months and then make sure you really want it. But if you really, really want it, you can add it in on the back end and sometimes it's cheaper than actually buying the car up front with those features. So I want you to kind of think through buying those extras

and see, hey, if you really, really want it, buy it on the back end. But if it's more cost effective to buy it in the car, obviously that's easier. So these are some of the things that I want you to consider and some car buying mistakes that you truly, truly need to avoid. I hope you guys learned a ton in this episode.

If you guys have any questions, make sure to hit us up on Instagram, TikTok, Twitter, at Master Money Co, and follow us on Spotify, Apple Podcasts, or whatever podcast player you love listening to this podcast on it. If you want to help out the show, leave a five-star rating and review on Apple Podcast or Spotify. I cannot thank you guys enough for listening to this episode. I want to just bring you as much value as I possibly can.

That is my goal with each and every single episode. So if you guys have any questions, please make sure you reach out. I hope you learned as much as you could. And share this with a friend or family member if you can. Thank you guys so much for listening. We'll see you on the next episode. Frozen lasagna, medium power, 15 minutes. Sounds like Ojo time.

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