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Should You Buy New or Used Cars? Pros, Cons & Insider Tips Revealed! · Earn Your Leisure

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• 1:51
  Speaker 2: You've mentioned used cars and new cars, right, so can
• 1:56
  Speaker 2: you go down that rabbit hole, like what's the benefits
• 2:02
  Speaker 2: of having a used car versus a new car? Or
• 2:08
  Speaker 2: a new car versus a used car?
• 2:10
  Speaker 3: All right, so there's a lot of this is this
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  Speaker 3: is a huge question that we get should I buy
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  Speaker 3: new or should have I used one? I'll tell you something.
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  Speaker 3: You got to take your ego out of this. Okay,
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  Speaker 3: this is a financial decision. I tell people all the time.
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  Speaker 3: If you're going to keep a car, let's just say
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  Speaker 3: you're gonna drive a lot of mileage. When I say
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  Speaker 3: a lot of miles, I'm talking about over twenty thousand
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  Speaker 3: miles a year. And you plan on keeping this car,
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  Speaker 3: you know, for a certain amount of time, for let's
• 2:40
  Speaker 3: say an extended period of time, it makes sense to
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  Speaker 3: buy used. Now, when you are buying used, I recommend
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  Speaker 3: that you buy it from the authorized dealer. And here's
• 2:52
  Speaker 3: the reason why. When you're buying the car from an
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  Speaker 3: authorized dealer, these vehicles have gone through an inspection, so
• 2:58
  Speaker 3: that dealership, meaning let's just say you're buying a pre
• 3:01
  Speaker 3: owned Honda. Okay, yes, I can go buy a pre
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  Speaker 3: OneD Honda on a side lot you know, of a
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  Speaker 3: neighbor or whatever the case may be, and I may
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  Speaker 3: pay a little bit less. But when you're buying it
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  Speaker 3: from the dealership, remember this is a long term investment.
• 3:18
  Speaker 3: Investment's a trick, you were to say, when it comes
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  Speaker 3: to this. But when you're buying the car from the dealership,
• 3:26
  Speaker 3: now you have the backing. Let's say you're buying it
• 3:28
  Speaker 3: from a Honda dealership. You have the backing of Honda
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  Speaker 3: and that dealership to make sure that vehicle has gone
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  Speaker 3: through a rigorous inspection, making sure that you know, everything's
• 3:37
  Speaker 3: working properly, right, you want to make sure the vehicle's certified, right,
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  Speaker 3: so that has a certified warranty on it. Normally that's
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  Speaker 3: an extension of the manufacturer's warranty. And in case something
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  Speaker 3: goes wrong and you know, the first you know, three
• 3:49
  Speaker 3: or four months of you driving the vehicle, you can
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  Speaker 3: go back to the dealership and say, hey, wait a minute,
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  Speaker 3: I just picked up this vehicle, you know, two three
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  Speaker 3: months ago, and this is what's wrong with it, and
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  Speaker 3: you have that warranty there. When you do these cars
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  Speaker 3: from these second hand lots, or you know, from the
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  Speaker 3: person down the street, or your or your gas station guy, whatever,
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  Speaker 3: you lose out on that. So even though you might
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  Speaker 3: be saving a little bit money upfront, you're probably gonna
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  Speaker 3: i'd say probably more than likely, you're gonna pay that
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  Speaker 3: money back in repairs and things of that nature. So
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  Speaker 3: I always recommend if you are buying used, buy certified,
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  Speaker 3: pre owned, and buy from the authorized dealer. Now, why
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  Speaker 3: would you buy a used vehicle? Like I said, if
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  Speaker 3: you're using the vehicle, you're putting a lot of miles
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  Speaker 3: on the vehicle. That's to me, the most important factor
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  Speaker 3: in buying a used vehicle. Now. The problem right now,
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  Speaker 3: and what we saw during the pandemic is use cars.
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  Speaker 3: Used car pricing went through the roof, right, So just
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  Speaker 3: to give you an idea, in twenty twenty, the average
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  Speaker 3: use car price was around twenty thousand dollars. In twenty
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  Speaker 3: twenty two, it was over thirty thousand dollars for the
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  Speaker 3: same car, same type of vehicle, So prices jumped drastically.
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  Speaker 3: You're starting to see that come down a little bit,
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  Speaker 3: but it's still much higher than what it was back
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  Speaker 3: then during the pandemic. Right before the pandemic, twenty nineteen,
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  Speaker 3: cars were depreciating of about three percent, right, and in
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  Speaker 3: twenty twenty one and twenty twenty two they jumped up
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  Speaker 3: thirty two to thirty six percent. So it was a
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  Speaker 3: very difficult time. This is when people were saying, hey,
• 5:22
  Speaker 3: you know what, I have a lease and they were
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  Speaker 3: selling their leases or they were getting money back for
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  Speaker 3: their cars. But it made it very difficult to buy
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  Speaker 3: a vehicle. Believe it or not, some people were actually
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  Speaker 3: buying used cars for more than the original price that
• 5:34
  Speaker 3: someone paid for it as a new vehicle. So the
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  Speaker 3: market was crazy. But it's starting to settle. Out a
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  Speaker 3: little bit. I think by the end of twenty twenty
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  Speaker 3: five you'll see numbers start to come back down, mainly
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  Speaker 3: because the new car inventory is starting to come back.
• 5:48
  Speaker 1: I'm just thinking in my head, you get the used card,
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  Speaker 1: you're getting a double at thirty thousand at the minimum
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  Speaker 1: double digit interest rate. That's a healthy payment, man, that's
• 5:57
  Speaker 1: a lot.
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  Speaker 3: Well, that's what people don't say it. The interest rate
• 6:00
  Speaker 3: is so important, right, And when you do get a
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  Speaker 3: certified vehicle from the dealership, normally that'll come attached with
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  Speaker 3: a better interest rate. But used car interest rates right
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  Speaker 3: now are in the sevens, you know, seven to fourteen
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  Speaker 3: percent is what I'm seeing. So people don't realize this
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  Speaker 3: is very important. When you're shopping for a vehicle. You
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  Speaker 3: have to do the big math, right, not just the
• 6:21
  Speaker 3: little math. When the dealership tells you, oh, it's you know,
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  Speaker 3: eighty to ninety dollars or one hundred dollars more in
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  Speaker 3: the monthly payment. If you're doing a seventy two month loan,
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  Speaker 3: right or a six year finance, that's seventy two hundred
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  Speaker 3: dollars that you're adding in finance charges, right, depending on
• 6:36
  Speaker 3: what your interest rate is To the price of the car. Right,
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  Speaker 3: So make sure you're aware of what the interest rate is.
• 6:44
  Speaker 3: Don't don't just buy based on payment. Does that make sense?
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  Speaker 3: Because if the higher the interest rate when on a
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  Speaker 3: simple interest loan. Okay, let's get into math. Right, on
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  Speaker 3: a simple interest loan, which was what every car loan is, right,
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  Speaker 3: the bank collects their money first, so you're paying back
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  Speaker 3: the interest first. The money that you're making on your payment.
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  Speaker 3: Let's just say you have a five hundred dollars payment.
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  Speaker 3: The majority of that payment in the beginning is going
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  Speaker 3: towards interest. Very little of that money is going towards
• 7:11
  Speaker 3: your principle. So what's happening is your vehicle is losing
• 7:14
  Speaker 3: value and you're not even touching the principle. Yet you're
• 7:17
  Speaker 3: paying all the The bank wants their money back first, right,
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  Speaker 3: They're not worried about you paying off the car, yet
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  Speaker 3: give me my money. So you're paying off the the
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  Speaker 3: interest and then you're starting to hit that principle. Around
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  Speaker 3: the halfway mark is now when you start to cut
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  Speaker 3: into the principle. But what happens is that vehicle is
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  Speaker 3: depreciating in value. Not to mention, let's say that vehicle
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  Speaker 3: was in an accident. If that car got hit and
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  Speaker 3: now you have a bad car FAX, that dropped the
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  Speaker 3: value of the vehicle also, so you're accelerating the depreciation
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  Speaker 3: while you're still paying all of this interest.
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  Speaker 2: That makes sense, Yeah, yeah, yeah, before well before the
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  Speaker 2: used car. What about a warranty that comes with the.
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  Speaker 3: So when you get when you get a certified vehicle,
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  Speaker 3: those normally come with an extension of the manufacturer's warranty.
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  Speaker 3: That's if the vehicle's you know, still a fairly new car. Right,
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  Speaker 3: let's say it's a two or three year old vehicle.
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  Speaker 3: Now you can buy extended warranties and a lot of
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  Speaker 3: these second hand lots they will send you an extended warranty,
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  Speaker 3: but you got to redefined print. Some of them have deductibles,
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  Speaker 3: high deductibles, or there's certain the only cover certain aspects
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  Speaker 3: of the vehicle. So you got to be very careful
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  Speaker 3: with those. You know, secondhand warranties. Some of them are great.
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  Speaker 3: Don't get me wrong, some of them are great, but
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  Speaker 3: you want to you have to do the Like I said,
• 8:33
  Speaker 3: you have to do the research. You got to redefined print.
• 8:35
  Speaker 3: Whenever you're signing these contracts. Go back to what I
• 8:38
  Speaker 3: was talking about with the interest rate. When you're paying
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  Speaker 3: that interest and lets the vehicles depreciating, that's how you
• 8:45
  Speaker 3: end up what's called upside down, where you owe more
• 8:48
  Speaker 3: than it's worth. Right, you go to the dealership, you
• 8:50
  Speaker 3: go to trade it in, and they go, well, you
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  Speaker 3: owe fifteen thousand, but the car is only worth ten.
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  Speaker 3: So what happens is people take that five thousand dollars,
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  Speaker 3: roll it into their next car, and essentially they're paying
• 9:02
  Speaker 3: for that old car in the price of their new car.
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  Speaker 3: Not to mention they're paying interest on that also, So
• 9:07
  Speaker 3: you have to be very careful with that. You can
• 9:08
  Speaker 3: get into a really bad cycle of rolling negative equity
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  Speaker 3: into the next car, in the next car, in the
• 9:14
  Speaker 3: next car. What I tell people who are in that
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  Speaker 3: situation is your best option to end that cycle is
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  Speaker 3: to lease a vehicle. Now you're gonna be paying more
• 9:25
  Speaker 3: because you're gonna have to roll that negative equity into
• 9:27
  Speaker 3: the vehicle. You may even have to put some money
• 9:29
  Speaker 3: down on the lease so the bank can look at
• 9:31
  Speaker 3: it as a favorable purchase, right, meaning why would the
• 9:35
  Speaker 3: bank give you forty thousand dollars for a vehicle that's
• 9:40
  Speaker 3: only worth thirty thousand, Right, they're gonna want to see
• 9:43
  Speaker 3: some money down. But at the end of three years
• 9:45
  Speaker 3: and you've made that those payments on time, but then
• 9:48
  Speaker 3: the three years you walk away, now you're out of
• 9:50
  Speaker 3: that negative equity cycle and your payment's gonna be much lower.
• 9:54
  Speaker 1: Yeah, I'm glad you brought up that and the warranty piece,
• 9:57
  Speaker 1: because that can get tricky a lot of times. It
• 9:59
  Speaker 1: will be fifty thousand. You buy a used car, it
• 10:01
  Speaker 1: already has thirty six thousand. That means you're only fourteen
• 10:03
  Speaker 1: thousand miles before happening to get it extended. Then you
• 10:07
  Speaker 1: have it for six years, and that extend that might
• 10:09
  Speaker 1: go to one hundred thousand. But by the time you
• 10:11
  Speaker 1: finish paying the six years, you've passed one hundred thousand,
• 10:13
  Speaker 1: and so those are the type of payments that you
• 10:15
  Speaker 1: can't account for that will come up inside of that deal.
• 10:19
  Speaker 2: But I'm walking warrantys.
• 10:22
  Speaker 3: Warranties work in two ways. Keep in mind, it's mileage
• 10:24
  Speaker 3: and time. So there's a thing a lot of people
• 10:26
  Speaker 3: don't know this. This is a thing called data first use.
• 10:28
  Speaker 3: It's called the DOFU right, data first use. So your
• 10:31
  Speaker 3: warranty starts from the data first use. Let's say you
• 10:34
  Speaker 3: have a four year warranty and you buy the vehicle
• 10:37
  Speaker 3: in November of twenty twenty three, right, So that's when
• 10:42
  Speaker 3: your warranty starts. So let's say you're a four year warranty.
• 10:46
  Speaker 3: November of twenty twenty seven is when your warranty expires.
• 10:49
  Speaker 3: If you come back and say, hey, you know what,
• 10:52
  Speaker 3: let's just say you bought a twenty twenty four in
• 10:54
  Speaker 3: twenty twenty three, right, Because cars come out early, right,
• 10:57
  Speaker 3: they come out for the next model year.
• 11:00
  Speaker 2: You don't.
• 11:00
  Speaker 3: You don't have a twenty till twenty twenty eight. I
• 11:03
  Speaker 3: say you bought a twenty twenty four and as a
• 11:04
  Speaker 3: four year warranty, but you bought it in twenty twenty three.
• 11:07
  Speaker 3: Your warranty expires November twenty twenty seven, not in twenty
• 11:11
  Speaker 3: twenty eight. So you have to keep in mind it's
• 11:14
  Speaker 3: mileage or time, whichever one comes first. You can say, hey, listen,
• 11:18
  Speaker 3: I have a forty eight thousand mile warranty and I
• 11:20
  Speaker 3: only had my vehicle for three years. If you hit
• 11:24
  Speaker 3: that time, I'm sorry. I've had my vehicle for past
• 11:27
  Speaker 3: the time that the warranties allowed. You're aut A warranty
• 11:30
  Speaker 3: doesn't matter if you're under on your mileage.
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