It’s going to come at a cost. It’s either going to benefit you or it’s going to hurt you. It’s either going to benefit you or it’s going to hurt you. Also, another huge cost that’s always ongoing for most people, meaning that most of them will always have a car note for the rest of their life, is a vehicle. A vehicle and credit cards is probably going to be the killing of your finances and it’s going to be the determination for whether or not you get rich or you get or you’re poor. Because most people are not financially savvy enough to make the sacrifice and not having a car note.

We’ve been programmed the same way that we’ve been programmed to have credit cards, the same way that we’ve been programmed to have 30-year loans and mortgages, the same way that we’ve been programmed to adjust how much you buy based off of what your income is, is the same way that we’ve been programmed. I’m not saying that it’s bad depending on the circumstances for you to buy a new car. Absolutely not. It depends on your circumstances. I’m not telling you that it’s bad to make payments on a lease. Absolutely not. As a matter of fact, you can write off most lease payments depending on what the vehicle is used for, so on and so forth.

There’s a lot of different ways that you can have this conversation. No, Detroit is hitting. Detroit is slapping right now. Detroit is slapping. But the point that I’m making is that one thing that people are always going to do is figure out a way to get into a new car. Eighty four months. Eighty four seven years for a car. That is crazy. Yeah, I mean, you know, cars have gotten so expensive, Nora, that the only way consumers can get a monthly payment that they can afford is to continually stretch out the length of their loan, which leaves them paying thousands more in interest, as well as finding themselves sometimes in this position called being upside down on their loan, where the car is worth less than what is owed on the loan.

What’s a familiar term for those who live through the financial crisis and the real estate crash of 2007, 2008, 2009, and sort of what we saw when homeowners were underwater on that case. Let’s talk a little bit about some of the upsides to a longer loan and some of the downsides. The upside is what you mentioned. A smaller payment. You spoke to somebody who said, OK, well, I don’t have to pay twelve hundred dollars a month for this truck anymore. I can pay six or seven hundred dollars a month instead. But then they end up paying so much more in interest.

Give us the numbers here. Right. So if the average price for cars around 50 grand, which is what it is now for a new car, you do a seven year loan on that and you end up paying close to sixteen thousand dollars in interest. I can’t see it, bro. I can’t see it coming down my eyes, but I got to make the song cry. I can’t see it coming down my eyes, but I got to make the song cry. I can’t I can’t see it, dog. Sixteen thousand above above the price of the car and the price of cars has went up.

And in order to be able to finance it, I’m willing to pay sixteen thousand dollars above the price of the car. That’s the same thing that I’ll do with your home. By the time that you pay off your house, you are more than paid two and a half times the cost of the house. You buy a house of three four hundred thousand. You’ve been spent nine hundred one point two million dollars for that same three four hundred thousand dollar house. But I got equity and I actually I’m a homeowner and that’s not even considering the property taxes, the maintenance, the repairs, the insurance change in the floors updates.

We love finance and we love which is about five thousand dollars more than you would. I was looking at a video of a guy that said that he had bought his house for dirt cheap. He fixed it up. He spent about one hundred thousand dollars over the years total when he did the majority of the work himself. And they came out and they reassessed the property. And they now his property taxes is so high because the value of the property is one of significantly. They never told you about that. They never talked to you about that.

For most people, for most people, it’s better off to put your put your money in the stocks than it is to invest in real estate unless you truly understand it from a business perspective. Because the true cost of home ownership is going to kill you. And if you don’t understand a long term play of it, if you’re not getting rid of money, if you’re not actually cash flowing and then you can also you know, depending on if you ten thirty one exchange, all of this other type of stuff. If you don’t truly understand it, then you are better off putting your money in the stocks and letting it flip over and compound over a period of time.

At least you don’t have no additional costs that come along with it. Yes, he did. He said, bro, he said he financed. I mean, he bought a house and it was nothing. And eventually, over time, he fixed it up and he said that, you know, now it was complete fucking dump is becoming a finesse. It’s been a finesse. It’s becoming a finesse to even own a home is becoming a finesse. He said he can’t even afford to play since he bought it because he bought it for a certain amount. And now that they reassessed it based off of the improvements that he made in the property taxes, make it impossible for him to actually own a home anymore.

Over one hundred and thirty K. It was complete fucking dump inside and out so low. Since I have purchased it, I’ve put about one hundred and twenty thousand cash into it. Well, they come along and reassess it. My taxes are going to triple his taxes. He said they came along and reassessed it after he put all of his money into it and fixed it up. And his property taxes has gone triple, which means that he’ll never really own the home. And he got to continue to pay more every single year based off of the valuation of the property going up.

Eventually, it’s going to be a collapse of the system and it’s going to be a correction of some sort. I don’t know what that’s going to look like yet, but it’s all a finesse. So you really have to be financially savvy to understand exactly what you’re doing out here in these markets paid on a five year loan, you know, which used to be the standard. But folks really aren’t paying close attention to the loan terms. They’re just looking at that monthly payment. And what can I afford right now? And you know, that’s definitely makes sense, especially as people are trying to figure out, you know, what are some stable purchases versus discretionary and trying to make it a manageable month to month.

When it comes to payments here. But I mean, in some cases, it’s just not better for some people in that you at least are not defaulting here. Yeah, I mean, it raises the question of if you can’t afford a $50,000 car, maybe don’t get a loan that stretches out for seven years. But, you know, the issue becomes, you know, being underwater, using the real estate term upside down, using the car term at the end of your loan. That means you still have debt. If you’re going to get another car, you still have debt in the old car that you’re going to have to roll into your next law.

And so your debt just keeps growing. How long do people have a good position to be in? How long do people typically hold on to cars, Keith? Well, the average age of a car on the road right now is 10 or 11 years, Tim. So, you know, they hold on to them for a long time. Quality is better these days than it used to be. So cars will go farther and run longer. I hear you, Billy. Having so much interest being paid on a car loan, financial advisors would tell you is not the best approach.

I do want to add another wrinkle to this affordability story, Keith. And it’s one that you’ve written about a lot, especially with regard to newer vehicles. And that’s the cost that go into owning a car apart from ownership, specifically insurance and the way that that has gone up in recent years. Because that is an entirely different element here that really constrain people. Yeah, insurance costs have gone through the roof just like car prices. Each have risen by about 30 percent over the last five or six years. And in some big cities, I’m based here in Detroit, insurance costs are just sky high.

And it can be as much as your car loan or more. So the cost of car ownership has become more onerous, more costly. And we are a driving nation, you know, the 250 million cars on the road today outnumber the licensed drivers. If you guys can figure out how to minimize your costs, get rid of the notes and all of this stuff so that you can ultimately be in a better position. That’s how you win in life is to minimize the cost so that you can then spend your money on the stuff that will make more money for you.

And then, you know, capitalize off your investments and live the life that you want to live. Don’t over buy. Don’t overspend. Don’t overfinance. Get rid of the debt. And then you’ll ultimately be able to truly win in life. Honestly, the rest of this is nonsense, bro. Ain’t no way in the world. Ain’t no way in hell unless y’all getting the Bugatti and you about to make more money off of that Bugatti by marketing it and marketing yourself and looking at it from a business perspective. Ain’t no way in hell why y’all should be getting seven, eight, nine year car loans.

There’s no reason for y’all to do that. [tr:trw].

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