Latest / The Smoke Break with Adrian The Car Guy / How to Buy a Car With Bad Credit (A Finance Manager Explains)

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How to Buy a Car With Bad Credit (A Finance Manager Explains) · The Smoke Break with Adrian The Car Guy

• 0:00
  Well, technically, as long as you have a pulse and a credit score, we can try to get
• 0:03
  you something.
• 0:04
  I'm going to give you guys a little secret, okay?
• 0:06
  And I tell this all to my managers. It is easier to get an approval with a repo than
• 0:11
  it is with a past due.
• 0:13
  30 banks and you're like, oh, that's 30 credit inquiries.
• 0:15
  Legally speaking, within a 14-day period, that counts as one.
• 0:18
  I've literally sold 4x2 trucks where I can convince the customers to be like, you
• 0:22
  don't need it. Just get a 4x4 sticker from the OEM.
• 0:24
  That way you can look cool.
• 0:25
  What grinds my gears is people coming in asking for a $60,000 vehicle for $500 a
• 0:29
  month. It's like, do some math.
• 0:31
  Do a little bit of math.
• 0:41
  What's going on? We're back here in the Smoke Break podcast.
• 0:45
  I am Adrian, the car guy, and we got Hector the finance guy.
• 0:49
  We're having a different scenery today. We're actually in the showroom of the Jeep
• 0:53
  dealership.
• 0:54
  So today we're going to be talking about a lot of questions that consumers have
• 0:58
  regarding financing and credit.
• 1:01
  We got a couple questions that came from our viewers, you know, and hopefully we get
• 1:06
  to answer some of the questions that people have, but they don't somewhat want to
• 1:13
  ask or they ask. They might be embarrassed to ask.
• 1:15
  They might be embarrassed to ask. Or they just don't know what to ask.
• 1:18
  There is a question where it's like, hey, do you guys take vehicles and trade that
• 1:22
  still have a balance? Like questions like that.
• 1:24
  And then sometimes they do ask some salesman and then the salesman give them wrong
• 1:28
  information. So we're here to clear it up.
• 1:30
  I was a finance director for many, many years and Hector's currently in finance.
• 1:35
  So right now our roles, he's the finance manager at the CDJR store and I'm the
• 1:39
  general manager. He's my boss.
• 1:41
  Adriana's behind the camera, by the way. And Adriana.
• 1:43
  Yeah, Adriana, introduce yourself. Oh, hi guys.
• 1:46
  It's me. It's Adriana. I'm, you know, different scenery today.
• 1:49
  I'm behind the scenes, having some of these guys answer some questions.
• 1:54
  And this, if we're going to break it down into five sections, there's a lot of
• 1:57
  questions regarding credit myths. People have questions regarding down payments,
• 2:01
  negative equity, and overall the finance process.
• 2:03
  So let's dive right into it. Cool. All right.
• 2:06
  Let's do it.
• 2:07
  So
• 2:07
  What credit score do you actually need to buy a car?
• 2:11
  Well, there's many ways to answer that. But Hector, go ahead.
• 2:14
  Well, technically, as long as you have a pulse and a credit score, we can try to get
• 2:18
  you something. At the end of the day, it's going to affect the approval and affect
• 2:22
  your rate more than anything. I mean, we've gotten 400 beacons approved,
• 2:28
  490, which is a very deep subprime score approved.
• 2:32
  But that comes at a cost of interest rate.
• 2:34
  And so the client now has to pay a lot of interest to the bank.
• 2:37
  But you have an approval. You have a bank.
• 2:38
  I mean, you have a bank loan. You have a car.
• 2:40
  You have a way to move and improve your credit over time.
• 2:43
  And we've seen, I mean, obviously a 780, 800 credit score, every single bank will
• 2:47
  want that.
• 2:47
  It really depends because right now banks are getting a lot smarter.
• 2:50
  It's kind of like what Hector said. We've seen 700 beacons get declined and we've
• 2:54
  seen 520 beacons get approved with a better rate.
• 2:57
  It's all about what's in your history. So if you're a 580 Beacon and you have a
• 3:03
  well-paid mortgage and you have a well-paid vehicle, but the reason you're a 580 is
• 3:08
  because your credit utilization is above an 85%, you have Three credit cards or two
• 3:13
  credit cards that have a thousand dollar limit, but they're you all you owe almost
• 3:17
  nine hundred dollars on them. That's going to drive your score down, but it's really
• 3:21
  not going to determine too much whether you get approved or not.
• 3:25
  Uh, it's going to determine more than anything
• 3:29
  what rate you get, right? And I've seen 520s, 550s, 580 beacons get single-digit
• 3:34
  interest rates. I'm surprised some of these approvals we get sometimes, honestly.
• 3:38
  Yeah, it's it's they're crazy. It's submitted every deal, no matter what every deal,
• 3:41
  submit every deal. And And even if you're in the lower 500s, maybe you're struggling
• 3:44
  a little bit, maybe something's going on with your credit bureau, like.
• 3:47
  Adrian said you've used up your credit utilization a little bit too much.
• 3:50
  Maybe you've had to rely on the credit cards a little bit too over the last couple
• 3:53
  of months, and now you're carrying a balance over from month to month.
• 3:56
  I understand that.
• 3:57
  We're not the bank. Let's structure something.
• 3:59
  Let's find a vehicle you like. Let's see where you are comfortable on a payment and
• 4:03
  then let's send it up to the bank because you'd be surprised.
• 4:05
  If your credit history is good, the bank may say yes and you may get a rate that you
• 4:09
  weren't expecting.
• 4:10
  We've seen. 500 beacons get 9% rates. It's insane.
• 4:14
  And I've seen 680 beacons with a repo. So it can happen.
• 4:19
  You can have a 580, 550 Beacon with perfect paid autos for the past three years, but
• 4:23
  I've seen a 680 Beacon score that has a repo.
• 4:26
  Can I get them approved? Of course I still can.
• 4:28
  A lot of these banks are not score-driven.
• 4:30
  They're more history driven. They're more of what their internal scoring, what the
• 4:34
  internal risk is for you to pay them the loan back.
• 4:36
  A lot that has to do with it. If you're looking at an $80,000 vehicle and
• 4:42
  the most you've ever paid was a $400,000, $350 payment.
• 4:47
  They will give you more if you've been paying that $350,000, $400
• 4:50
  payment more, but that payment, you've been paying it consistently, but they won't
• 4:54
  give you $1,100, $1,300 unless you have some type of cash commitment.
• 4:59
  So it also depends on how much have you borrowed.
• 5:02
  You You got to be realistic too. I mean, if you're a first-time buyer, you want to
• 5:05
  buy a TRX over $100,000, it could happen.
• 5:09
  Didn't we actually sell one to a first-time buyer?
• 5:11
  But the big guy had like 25 grand. Yeah. If you have 25 grand down, a bank will play
• 5:15
  ball. Actually,
• 5:16
  that's a good example. We had a customer that had a good score but had no auto
• 5:21
  history. So the bank's like, you know what?
• 5:24
  He has a good score. He's paid whatever he has good.
• 5:26
  He's never had auto. We will take a risk on him, but we need some cash commitment.
• 5:31
  We need 25% down. And that's exactly what he came up with.
• 5:35
  He came up with 25 grand down and we ended up selling him a TRX.
• 5:39
  And again, as long as you listen to us, we'll be able to get you approved.
• 5:43
  But you got to accommodate. You really want TRX.
• 5:46
  You can get it, but it's going to cost some money.
• 5:49
  Can someone with a 500 credit score realistically get approved and can someone with
• 5:54
  the recent repossession, you know, qualify, still qualify for a vehicle?
• 5:59
  How recent to the repossession as well? Let's let's say within a year.
• 6:03
  Well, I'm going to give you guys a little secret, okay?
• 6:05
  And I tell this all to my managers. It is easier to get an approval with a repo than
• 6:11
  it is with a past due. Yeah If you're past due on a vehicle, you're past due on your
• 6:15
  mortgage, the likeness of you getting approved, I don't care how much money you got
• 6:18
  down, is very, very slim. I mean, very slim.
• 6:22
  Repos, I can deal with.
• 6:23
  Think of it like a bank. If a bank is seeing that you're behind, you're struggling
• 6:27
  with your mortgage payment, you're struggling with the current loan payment, your
• 6:30
  current car note, what sense is there in giving you another one?
• 6:36
  The way they see it, if... You don't care where you live, they're definitely not
• 6:40
  going to give you something. Yeah. You know, but we can go back to the same thing
• 6:44
  where it's like, hey, you can always drive.
• 6:45
  You can always sleep in your car. You can never drive your house.
• 6:49
  Car business lingo. At the end of the day,
• 6:52
  A bank will dance with a certain amount of money down.
• 6:55
  Yeah. You have to break it. You have to know you have to be comfortable with.
• 6:58
  OK, where is it going to break? You may have to put.
• 7:00
  More than 30, 40% out. But how badly do you want that car?
• 7:04
  How badly do you need that car? At some point,
• 7:06
  every bank credit has a, you know, what is it going to take for me to get approved?
• 7:11
  And you, when you have really, really bad credit, you have to come to conclusion
• 7:15
  that you're going to have to buy your credit back.
• 7:17
  You have to buy it back. And the way you buy it back is by putting a lot of money
• 7:21
  down. On a vehicle that you're probably not going to want right now, but in about a
• 7:26
  year, two years, we'd probably be able to upgrade you and then move forward.
• 7:29
  And then you get some re-establishment in your credit.
• 7:31
  So that's going to be very important. One thing I'll say on that: don't compare your
• 7:35
  credit situation to your best friend, to your neighbor, to somebody else, because
• 7:39
  everybody's credit is different. They're like, oh, well, you got this guy done with
• 7:42
  no money down. Yeah, but his credit situation is completely different.
• 7:46
  His structure, his vehicle was completely different.
• 7:48
  Maybe they're going to tell you, Hector, whoa, we were very similar scores.
• 7:51
  They were a 620 and I was a 620. Score is one thing.
• 7:53
  History is one thing. What is on his history?
• 7:55
  The score is going to put you into a tier.
• 7:57
  The history is going to get you the approval.
• 7:59
  Right. And so if he has had an account open for 10 years, he's paid everything on
• 8:04
  time and maybe credit utilization is up. So that's putting his score a little bit
• 8:07
  lower. Well, his history is completely different to you that you have one or two
• 8:10
  repossessions and you've already paid, you know, three payments late on your last
• 8:15
  car note, whatever it may be. Your approval is going to be completely different
• 8:19
  Some people don't seem to understand on why it doesn't make sense to buy a
• 8:23
  depreciating asset in comparison.
• 8:26
  So can you go into details on why
• 8:29
  if you had an $80,000 sitting in the bank and there was a $70,000 vehicle, why is it
• 8:34
  not the smart choice to pay that car cash?
• 8:37
  Overall rate of return. I mean, your one depreciating asset, what you just said, the
• 8:41
  value of what you just bought will keep depreciating over time until it's worth
• 8:45
  nothing. It will never appreciate. The only time in history a vehicle has
• 8:48
  appreciated was COVID times. Why? Because of markets, supply chain and all that
• 8:53
  craziness that happened. That is the only time where the used car market or the car
• 8:56
  market has gained some appreciation. Apart from that, these things will depreciate
• 9:01
  year over year versus putting your money in other vehicles such as just S&P 500.
• 9:06
  If you go in here, you have 80,000, you put it as an S&P 500, and you have 80,000,
• 9:11
  and you put it in a 2015 Ram 1500.
• 9:14
  You're talking about not a 30% spread. You're talking about 50-60
• 9:20
  because on a car, you're going to lose 20, 30, 40%.
• 9:25
  When if you were to put it in the S&P 500, you would have gained on the low end 20%.
• 9:30
  Low end. That's very conservative. And
• 9:32
  That's not you reinvesting your your dividend returns.
• 9:35
  That's not you pulling money out of the market.
• 9:37
  That's literally just
• 9:39
  buying SPY or VOO
• 9:41
  People are going to say, well, Adrian, I'm borrowing it, so I'm going to be paying
• 9:44
  interest on that loan. So, exactly. You're going to be paying a 7% interest, 6%
• 9:51
  interest.
• 9:53
  When you have a 50%, 60% gap, paying a 7%, okay, now you're not up 50%.
• 9:58
  Now you're up 43% or whatever the case might be, right?
• 10:01
  Big deal. It's a big deal. You're still up.
• 10:03
  Still up.
• 10:03
  Yeah, the only time I would ever buy a vehicle is something that you're going to
• 10:06
  keep. 10 plus years. And it's a specialty card.
• 10:09
  You also have to analyze your trade cycle.
• 10:10
  And that's
• 10:11
  Somebody that bought between 2020 to 2023 is now ready to trade out.
• 10:14
  It's been three to four years, more than likely five years on the high end, six
• 10:18
  years. And it's a completely different market from when they bought their vehicle.
• 10:23
  Prices have inflated back when they were buying their vehicles due to the market
• 10:28
  supply, the supply chain, what was going on with that.
• 10:31
  Rates were low, but now it's a completely different market.
• 10:34
  And so
• 10:36
  we see a lot of clients come in and they're like, well, I got this five years ago.
• 10:39
  Sorry, five years ago, that was, it was a whole different country.
• 10:41
  Five years ago, I had more hair.
• 10:43
  Does having a coal signer make a difference when getting approved?
• 10:47
  The banks know that if you have a 400 credit score and you have an 800 credit score,
• 10:51
  right? They know that the car is not for the 800 Beacon.
• 10:54
  Because the 400 is not co-signing for the 800, right?
• 10:57
  So there is still a risk involved in all of this.
• 11:01
  And
• 11:02
  ultimately, it does help, but don't expect to get the rate or the approval like if
• 11:09
  the 800 was there by themselves. So So we get a lot of times where we get a lot of
• 11:13
  people with bad credit and they automatically are like, hey, you couldn't get
• 11:18
  approved. And then automatically they're like, well, my mom's an 800.
• 11:20
  Okay, great. Perfect. Well, that will help you get approved.
• 11:23
  Then we get them approved and it's a 14% rate.
• 11:26
  And then the mom is like, no, that's too high of a rate.
• 11:29
  The only difference now is that we can actually get you approved because we have
• 11:32
  somebody that has proven to pay their bills over years
• 11:35
  For a 400 Beacon to get a 13, 14%, that's a win.
• 11:38
  That's a win. That's a win in your book. Take it and pay it off, pay it well, and
• 11:43
  increase that score. You want to give yourself a better chance in the future.
• 11:46
  The 800 Beacon being in that loan is to give you another chance at improving your
• 11:50
  credit at a lower payment, at a much lower interest rate.
• 11:55
  Because if that wasn't the case, I mean, like you just said, you'd be paying 20%
• 11:58
  plus.
• 11:59
  Can someone get approved with collections or late payments on their credit score?
• 12:04
  Yes, 100%.
• 12:05
  All I ask is, as long as you're not currently past due.
• 12:08
  Yeah, I mean, I've been able to get people approved all day long.
• 12:12
  And you'd be surprised how many people have collections that don't even know they
• 12:14
  have collections. Yeah.
• 12:15
  Read your credit bureaus, people. It's free.
• 12:17
  You can go to get your free credit bureau every single year.
• 12:19
  Understand your credit score, understand your credit history.
• 12:22
  You have to stay on top of it. So that way you're not surprised when you come in
• 12:24
  here. You're like, wait, I paid that off.
• 12:26
  Well, apparently they didn't get the last $10.
• 12:29
  So you're in collection. Yeah, they'll send you into collections for $10, $20.
• 12:33
  And whether it's a collection for $10 or a collection for $10,000, it's a
• 12:37
  collection. It's a collection, and that's one hit on your bureau that you do not
• 12:41
  need.
• 12:41
  Student loans thing has been one of the biggest things we've seen recently where
• 12:44
  people are defaulting because
• 12:46
  They're deferred for so many years and then it's their time to start paying and then
• 12:50
  they don't pay it. So you've had a deferred student loan payment for four years and
• 12:54
  then now your
• 12:56
  $22 payment is coming up and you don't pay it.
• 12:59
  Yeah. Yeah, and it's going to mess you up.
• 13:01
  Pay your student loans, guys.
• 13:02
  And in student loans, if you don't pay it and you reach a certain amount of time,
• 13:05
  they'll garnish your wages.
• 13:07
  Yeah.
• 13:08
  Even if it's a small payment, just throw something at it.
• 13:10
  Like, should I pay off all my debt? Should I decrease my debt?
• 13:14
  Debt is a thing that's, I mean, credit is a thing that's alive, it's alive, it's a
• 13:18
  living thing, and so you have to keep feeding it.
• 13:21
  And unfortunately, America wants you to stay in debt because that's just the way.
• 13:25
  This country works. If you pay everything off, oh my god, yeah, Hector, we can't get
• 13:29
  political. No, I'm not getting political.
• 13:30
  It's just true.
• 13:31
  If you don't, if you don't have anything in your credit bill, you could have been an
• 13:34
  800 Beacon in 15 years. If you don't touch anything, you pay everything cash, you're
• 13:38
  a first time buyer. Yeah, first time buyer, everything you did in the 80s, 90s, and
• 13:41
  early 2000s doesn't matter. It goes away.
• 13:43
  It disappears. We've We've seen that multiple times where we get older customers
• 13:48
  that, you know, I paid everything off. I have a perfect payment.
• 13:51
  I've been paying everything cash. But right now, I don't feel like paying it cash
• 13:54
  because you're a first time buyer, sir. In the eyes of the bank, there's no history
• 13:58
  there. So now he's like literally an 18-year-old trying to buy a car.
• 14:01
  It's insane.
• 14:02
  As long as the structure makes sense, the banks want to give out loans.
• 14:05
  They're in the business of giving out loans, but they're not going to give out a
• 14:08
  loan to somebody that's extremely risky or that is going to put their portfolio out
• 14:11
  of whack. Yes. That's just the end of it.
• 14:13
  Just before we move on, is there any other credit questions that you guys can think
• 14:17
  of that customers have asked you?
• 14:19
  Pay your sh*t on time. Yep. And that's the best way to keep your credit alive.
• 14:24
  Don't bite more than you can chew. A lot of the times you bite more than you can
• 14:31
  chew and then you can't pay it and then credit takes a hit and then the negative
• 14:35
  snowball machine starts and now you're going downhill and it sucks.
• 14:40
  It sucks a lot. That's very true. So just pay your sh*t.
• 14:43
  Don't bite more than you can chew. Try to get something in the worst case scenario
• 14:48
  that you can afford. Just because you can afford a $900 payment today doesn't mean
• 14:52
  that you can afford, you're going to be able to afford it next year.
• 14:54
  Mm-hmm. So get something a vehicle should be something that takes you from point A
• 14:58
  to point B and and that's what it should be.
• 15:01
  There's different ways that everything can work around.
• 15:03
  You just have to explore. Don't be afraid of leasing.
• 15:05
  A lot of people are afraid of leasing for some reason.
• 15:07
  It's It's the whole Dave Ramsey thing where he's like, the approach a lot of, I
• 15:11
  mean, Dave Ramsey is great. Save up a thousand, pay off the highest interest rate
• 15:15
  first, and then you snowball. You know, Dave Ramsey is good.
• 15:18
  His first two points are good, but from there on out, it's like, oh, buy everything
• 15:21
  cash. It's like, yeah, Dave Ramsey's the same thing.
• 15:23
  I mean, Dave Ramsey is good and his stuff is
• 15:26
  good to get out of debt. Yeah. But he's not good at getting new debt.
• 15:29
  Or moving up an investment?
• 15:31
  So even though he has evolved a little bit and everything, I still don't agree with
• 15:35
  a lot of the things that
• 15:36
  he says. It works for somebody that's established and that has money.
• 15:40
  It does not work for the majority of America.
• 15:43
  And now we're going to go into the segment of down payments and monthly payments.
• 15:47
  And the question is: can someone really buy a vehicle with zero money now?
• 15:52
  Yes. Yes.
• 15:53
  Yeah, that's actually very commonly done.
• 15:55
  As a matter of fact, everybody wants to buy a vehicle with zero money down.
• 15:58
  As a matter of fact, if you have the credit, that'd be the best way to buy a car.
• 16:00
  You think so? As long as
• 16:04
  you can afford it. I would still say put some money down.
• 16:09
  I would never go 84 months and then put money down.
• 16:12
  Speaking of the 84 months thing, I was doing some reading prior to going live.
• 16:18
  The 84-month term is up 25% year over year.
• 16:23
  Damn. So
• 16:23
  And our national trade cycle is every three years.
• 16:26
  Every three years. So just. Imagine the negative equity that we're going to be
• 16:31
  dealing with in three to five years.
• 16:32
  I would definitely encourage someone to put money down to get the payments to be
• 16:36
  affordable at a shorter term. So let's just say, for instance, you're going to go 60
• 16:40
  months, but the 60 months is definitely going to make things a little bit less
• 16:43
  affordable for you. I would put money down just to get the payment to where you know
• 16:47
  you're comfortable with it at a shorter term.
• 16:50
  I would never put money down and finance for 84 months because that's you're
• 16:55
  offsetting at that point. I mean, you may as well just light your money on fire.
• 16:58
  The trade, that's the one thing that I'm worried about is long-term sustainability
• 17:03
  of the industry. Trade cycle is three years.
• 17:05
  The people that bought in COVID are already trading out.
• 17:08
  If not, they already traded out. So there's some negative equity being rolled over.
• 17:12
  Snowball is getting bigger. 84-month term is getting there.
• 17:15
  Rates have gone up.
• 17:16
  Can you look up the national credit card debt?
• 17:19
  I'm curious to see.
• 17:20
  Are we using Chat GPT or Google? We're using Google.
• 17:23
  Thank God.
• 17:24
  Okay. I think it's over a trillion. Over under?
• 17:26
  Yeah, like say your guesses. What are your guesses?
• 17:28
  I think 1.1. I'm thinking it's going to be right under a trillion.
• 17:32
  Okay. It says that it is $1.26 trillion. You're close.
• 17:40
  Yeah. $1.2 trillion in credit card debt, guys.
• 17:44
  That is
• 17:45
  insane. Pay your sh*t off, guys.
• 17:47
  The national average credit card balance for Americans is $7,000.
• 17:52
  That sounds about right.
• 17:54
  I'm picking that average up for sure.
• 17:55
  Why can focusing only on the monthly payment be a mistake?
• 18:00
  Affordability, what we talked about earlier, which where it's just because you can
• 18:04
  afford the monthly payment doesn't mean you can afford the vehicle.
• 18:07
  I mean, I can probably get you into a $500 payment on a vehicle.
• 18:12
  I think an easy way to answer that question is that why focusing on the monthly
• 18:16
  payment is not because we can automatically tell you, you want to be at a $700
• 18:22
  payment? No problem here to sign. And then next thing you know, you're at 96 months
• 18:25
  signing contract. But you're at $700. Hey, there you go.
• 18:29
  You're affordable. You're affording it. Even though you're financing a vehicle for
• 18:32
  eight years, then you're going to trade out of it in two.
• 18:34
  That's what I'm saying. $700 makes sense
• 18:37
  at a shorter term.
• 18:38
  When you come back and trade, you're going to be in a better position than if you
• 18:41
  were financing it for eight years. That's for sure.
• 18:43
  That's why we do that. Some customers get upset when we show them the 36, 48, and
• 18:47
  60-month terms. We have to. We have to, legally, I have to show you
• 18:52
  for compliance purposes. But it's also the best way to buy a car through your
• 18:56
  financing. Big chunk of change down, and then just keep it for three to four years
• 19:01
  and trade out of it. And then you use the equipment, positive equity.
• 19:04
  How much times have changed? You know, 25 years ago, long-term financing was 60
• 19:09
  months. Now we're doing 96 months. Now we're doing 96 months, baby.
• 19:11
  There you go. Yeah.
• 19:12
  God bless America. 2030, I think we'll see 120.
• 19:15
  By 2030. 120. 120. 120. I mean, they're already doing that in RVs and stuff.
• 19:19
  As a matter of fact, no, no.
• 19:22
  When I was buying an exotic car, they offered me 120.
• 19:25
  Yeah, but it's an exotic car. Yeah. Wow. You were basically financing a house.
• 19:28
  Yeah. Yeah. What was the loan on that? 200,000.
• 19:32
  Oh, the Lambo? Yeah. They offered me 120, but you did what?
• 19:35
  I didn't do it. I did 72, I didn't do it not because.
• 19:38
  I would have done it 100%. But the banks know this.
• 19:42
  In order to get a 120, my payment would have been so affordable.
• 19:45
  Like it would have been crazy. Like I wouldn't have had to sell it, nothing.
• 19:49
  But the reason I didn't do it is because to get the 120 term, you had to put 25%
• 19:54
  down. That was a requirement by the bank.
• 19:57
  Makes sense. That's a lot of risk. 120.
• 19:59
  If the banks are telling you that, you know, it's because they know the risk.
• 20:02
  They know you're going to be crazy. Those models are way out of whack at that point.
• 20:06
  When I went to NADA, we ended up going to the government side of NADA.
• 20:10
  So they gave us their contact information because one of the biggest things right
• 20:13
  now that they're trying to regulate is EV.
• 20:16
  The way EV is being charged to dealerships.
• 20:19
  And
• 20:19
  That's a very, very controversial topic right now because everybody thinks that it
• 20:23
  costs $10 a month to charge your EV when realistically I'm getting $1,500, $2,000 a
• 20:28
  month bills here at the dealership for using the supercharger.
• 20:31
  Thank
• 20:31
  Everybody gets their piece of the pie. The city, the county, the state.
• 20:35
  The federal government, but once everything is over and done with, a full charge on
• 20:39
  a supercharger is
• 20:42
  $70. So
• 20:42
  From not zero, but like zero to a hundred on the supercharger, how much would it
• 20:47
  cost? Well, it got about $75. About $75. But it takes 20 minutes.
• 20:51
  But if you were to put it on the level two, which would take maybe 12 to 13 hours to
• 20:55
  charge, it'll be nine bucks. That's interesting.
• 20:58
  It's called a demand charge. Yeah, it makes sense.
• 21:00
  So you go from eight cents a kilowatt to all the way to like 60 cents a kilowatt.
• 21:05
  Jesus. Yeah, because of the damage. Because
• 21:08
  you're pulling so much from the grid.
• 21:10
  Because customers want to know what are three factors that could help you that could
• 21:14
  help a customer lower their monthly payments?
• 21:17
  Make more money. Make more money? No, to lower your monthly payment.
• 21:20
  Yeah, my monthly payment is lower if I make more money.
• 21:23
  It's dumb. I know.
• 21:24
  Well, obviously, let's not answer the obvious questions, the obvious answers, which
• 21:30
  would be, you know, just money down and so on and so forth.
• 21:33
  What can you buying a vehicle you can actually afford will lower your monthly
• 21:37
  payment? Honestly, a lot of keeping up with the Joneses is keeping you guys broke.
• 21:42
  Correct.
• 21:42
  You know how many people come in saying, I need a 4x4.
• 21:46
  You do not need a 4x4. They do not need a 4x4.
• 21:49
  They're willing to spend $6,000 more for a 4x4 and they're never going to use it.
• 21:53
  They don't need it. They just want the damn.
• 21:55
  I've literally sold 4x2 trucks where I can convince the customers to be like, you
• 21:58
  don't need it. Just get a 4x4 sticker from the OEM.
• 22:01
  That way you can look cool. Oh, we could do that?
• 22:02
  Yeah. And that way you'll be fine.
• 22:05
  You save this up six grand. Right. My whole point
• 22:08
  is a Rubicon. Why do you want a Rubicon? I don't know.
• 22:10
  The
• 22:11
  Somebody could come in. Oh, I want a Rubicon.
• 22:13
  Why? Why? Are you going to go to the Rubicon Trail in California?
• 22:16
  No. Oh, you're going to be doing any kind of off-roading?
• 22:19
  Do you know about the split differential?
• 22:21
  Do you know what that means? Do you know what that means?
• 22:23
  No. It's like, okay, you know what wheel lockers are?
• 22:26
  No. Okay. Then why do you want it? Because of the sticker.
• 22:28
  Perfect. Let's get you a damn split and
• 22:31
  let's just get you a sticker. And we'll get you some tires as well.
• 22:34
  I just saved you 10 grand. Congratulations.
• 22:36
  Your monthly payment went down 200 bucks.
• 22:38
  There you go. See? Wants and needs. Everybody just comes in here.
• 22:41
  I want this. You don't need it. There you go.
• 22:43
  Oh, but I want
• 22:45
  This. But I need this payment. No, it's backwards.
• 22:48
  We need to do a segment called What Really Grinds Our Gears.
• 22:50
  Yeah, what grinds my gears is people coming in asking for a $60,000 vehicle for $500
• 22:54
  a month. It's like, do some math.
• 22:57
  Do a little bit of math. Take out your everybody's got a phone nowadays.
• 23:01
  You take out your calculator, you say $60,000 and you finance it for 72 months.
• 23:05
  That's $833. That's no interest, no taxes, no documentation fees.
• 23:09
  That's nothing else added to it. Add all of that up, you're over $1,000.
• 23:13
  So stop being unrealistic with yourself. Wants and needs what I want, what do I
• 23:18
  need? That's the best way to lower your monthly payment.
• 23:21
  Car prices are going up. Also, another thing: control your credit because this is
• 23:24
  the only lever you have nowadays. Yeah, you can negotiate the price of a vehicle,
• 23:30
  there's rebates, and whatnot. I mean, there's always that aspect of it.
• 23:33
  But the one thing you have control over is your credit score.
• 23:37
  Pay your sh*t on time, make sure you have a good credit score.
• 23:40
  You're going to get into a good tier, you're going to get a better interest rate,
• 23:43
  meaning you're going to pay more into the principal.
• 23:46
  And another thing is get advice from people that know what they're doing.
• 23:50
  Oh, yeah. You know how many times you're like, well, my uncle told me he's like, and
• 23:54
  what does your uncle do? Well, he's a plumber.
• 23:57
  He's a plumber. Oh, great. Yeah, let me ask the guy that has no idea about how
• 24:00
  financing works.
• 24:01
  Can you trade in a vehicle when you owe more than what it's worth?
• 24:06
  Yes, but be ready to pay more. Yeah.
• 24:08
  The money doesn't the negative equity, you owe 20, your car is worth 10.
• 24:13
  By the way, we don't set that price. The market sets that there's a huge
• 24:16
  misconception. Oh, you're just trying to take money from me.
• 24:18
  No, it's just your car is worth in the market.
• 24:22
  I'm not a market maker, I'm just a participant in the market.
• 24:25
  I take your car and I resell it.
• 24:27
  What determines how much negative equity a lender might finance?
• 24:31
  Loan of value.
• 24:32
  That vehicle is worth X amount of dollars.
• 24:34
  They're willing to lend you X amount of dollars on the particular vehicle.
• 24:37
  So it doesn't matter if the customer wants to agrees to pay $100,000.
• 24:41
  If the car is worth 20, the lender's only going to lend you between 100 and 120% of
• 24:46
  the actual value, market value of the vehicle.
• 24:49
  That's why whenever you trade in your vehicles, it's not us that we're like, your
• 24:52
  vehicle is not worth that much money. It's the fact that when I try to sell that
• 24:56
  car, I'm not going to be able to get it finance.
• 24:58
  You know what they'll say? Well, just give me more money for my car.
• 25:00
  It's like, dude, I'm a business at the end of the day.
• 25:02
  I have to resell your car in the market. Why would I give you an extra five grand
• 25:07
  just to sell you this one? And then I have to sell your car.
• 25:10
  Nobody's going to want to pay for it first.
• 25:11
  Why? When they can go down the street and buy it five grand cheaper.
• 25:14
  Doesn't make sense.
• 25:15
  Before we wrap things up, there is a behind-the-scenes question of the finance
• 25:19
  process that some viewers may have, and that is: how is dealership financing
• 25:24
  different from financing through a personal bank?
• 25:26
  So, here, here's first things first: you have to be ready to buy a car, okay?
• 25:31
  You have to know you're ready to buy a car.
• 25:34
  And a lot of people are like, oh, don't go to a dealership.
• 25:36
  They're going to shoot your credit all over the place.
• 25:38
  Do you not want the best interest rate? I mean, do you honestly not want the best
• 25:42
  approval? Way over 30 banks that we can shop you around.
• 25:46
  30 banks and you're like, oh, that's 30 credit inquiries.
• 25:48
  Legally speaking, within a 14-day period, that counts as one.
• 25:51
  That's actually very true. That's very accurate.
• 25:53
  And people are like, oh, people are looking at my credit.
• 25:55
  No, no, no, no, no. Like, I don't want too many inquiries.
• 25:57
  Counts as one within a 14-day period. If you go outside that 14-day period, okay,
• 26:01
  now there's two inquiries there. But do you not want the best rate?
• 26:04
  You're like, well, this bank is advertising me this.
• 26:06
  Okay, is it the best structure? What if I can get you that?
• 26:09
  Because you are one person. Trying to get a loan from a bank, I'm a dealership that
• 26:15
  I send multiple loans to that bank. That's actually a good way to put it.
• 26:18
  I I can pick up the phone and work on your behalf to get you a much better approval,
• 26:22
  a much better rate, a much better term than you just walking in there.
• 26:26
  Why? Because that's what I do. And maybe I can use that approval and say, talk to
• 26:31
  this other bank and be like, hey, this bank is giving me this.
• 26:34
  Can you do anything better? And your approval just got a little bit better.
• 26:38
  Or you can just protect your inquiries. And call it a day more
• 26:44
  than your interest rate. Up to you at the end of the day.
• 26:46
  Like, all right, you saved yourself two points on your credit score, but now you're
• 26:49
  paying 3% more on your interest. Yeah. How much are those two points on your credit
• 26:52
  score worth? Yeah, exactly. Three points on your interest rate?
• 26:55
  What if I get you 0% with through my bank?
• 26:57
  Sometimes, guys, you guys need to listen to us.
• 26:59
  We're trying to get you the best deal possible to try to, you know, and that's why
• 27:04
  we're doing this podcast. That way you guys can definitely understand and ask as
• 27:07
  much questions.
• 27:08
  I think it deserves a part two because
• 27:11
  there's so many more questions.
• 27:12
  Well, it was because this is a very important topic.
• 27:15
  And you know what? After we post this podcast, I guarantee there's going to be more
• 27:18
  questions. So,
• 27:18
  Right now, right now, guys, please make sure that you put it in the comments below.
• 27:21
  What questions do you guys have regarding automotive financing?
• 27:24
  And no question is too ridiculous because I've been asked some ridiculous questions.
• 27:28
  But thank you guys so much for joining us
• 27:30
  on this Smoke Break Podcast episode. Adrian, send us off.
• 27:33
  All right, guys. So thank you very much. Again, don't forget to like and subscribe
• 27:37
  and make sure you put all the comments, any questions that you guys may have
• 27:40
  regarding. Hit the bell for notifications.
• 27:42
  Oh, hit the bell for notifications.
• 27:43
  One last thing besides we're going to be answering all your questions in the comment
• 27:47
  sections down below. Also, we are now on Spotify and on
• 27:52
  Apple Podcasts and multiple platforms.
• 27:55
  We're going to put the link in the description.
• 27:56
  Make sure you guys follow us
• 27:58
  on Spotify and all that good stuff. That way we can be making more free content for
• 28:02
  you.
• 28:03
  All right. So guys, we'll see you on the next one.
• 28:05
  We love you guys. Bye.