Smart Car Purchase Guide — Step-by-Step Guide & Transcript

[00:00] As we've been doing this millionaire research, one of the pieces of data that we've discovered is, by studying 10,000 millionaires, that the average millionaire drives a four-year-old car with 41,000 miles on it,

[00:18] and of course it's paid for, and they haven't had car payments in decades, which is how they became a millionaire, because the average car payment now is over $500, about $504 a month over 84 months.

[00:30] if you invest $504 from age 30 to age 70, you'll have somewhere around $5 million in your Roth IRA. I hope you like your car.

[00:43] Our advice, knowing that cars lose 60% to 70% of their value in the first four years, is to buy a quality used car unless you have a net worth in excess of $1 million.

[00:57] Then if you want to buy a new car, you can afford to take the loss on it. But the worst car accidents do happen on the showroom floor. Well Dave I always worried about buying a used car Well what are you driving If you driving a car that you bought two months ago it now a used car If you buying driving a car you bought five years ago it a used car

[01:21] What are you driving? Listen, the vehicle quality is so high now that we get through 300,000 miles out of a car. Most of these cars run and run and run and run and run if you have to take care of

[01:39] them. So don't buy a new car unless you've got a net worth in excess of a million dollars. Now, how do you negotiate the best deal on your car? Well, the same way you do a lot of things.

[01:52] There's a couple of keys to negotiating. One is he with the most knowledge wins. So study. Learn about that car. Go on Trader.com. Go on Kelley Blue Book and Edmunds.com and look up stuff about the car.

[02:07] Google the car. Read articles about the car. Look at different versions of the car, different packages that are on the car, the luxury package, the standard package, the two-door, the four-door, the different engines that are in that particular car Learn all about a Honda Civic if you going to buy a Honda Civic Learn People impulse a big purchase like a car That makes you stupid You don impulse that

[02:34] You study that. And then pay cash, of course. Now, most of the time, paying cash means that you are doing a bank transfer, but sometimes you can walk in with the cash and just lay it on the

[02:48] table. It's not that much money. I mean, $7,000, $10,000, $15,000, whatever. It kind of blows a dealer's mind. But certainly if you're buying from an individual, when you put cash on the table,

[03:01] it says we have a deal. It doesn't say, oh, I need to check with my banker. You ever sold a car on Craigslist? I need to check with my banker. And then you never hear from them again. I'll take it, but my banker will do it and never hear from them again.

[03:14] But when you lay cash on the table, there's no, I need to check with my banker in there. It's a done deal, baby. It's locked in, right? And listen, just don't get married to one car. Be prepared to walk away. Listen, when you bought something emotionally,

[03:30] even the most inept seller recognizes the body language changes I mean you guys know when somebody bought something right Even though they haven done the deal the negotiation over once they know you married

[03:44] I'm married. I have to have this car. So just be quiet. Let them talk. The seller that is tell them that, you know, you've looked this car up. You've studied a lot. This seems a little high

[03:56] and then be quiet. Let them talk. You can negotiate online. There's a lot of ways you can do it. You can have the car inspected. And a good thing to do too is check with one of our endorsed local

[04:12] providers on the insurance side and find out what it costs to insure that car. You might be looking at one $7,000 car that's almost twice as much to insure as another $7,000 car. So you can get a quote from one of them or on your existing cars, jump in there and get a quote from the ELP.

[04:28] Most people that get a quote from our ELPs because they're brokers, they shop among a bunch of different people and they get the best possible deal. They save like 700 bucks. That's the average. So, and one in three drivers, 33% of you buy your insurance and you don't shop

[04:43] your insurance before you buy it. That's just dumb. It's an expensive thing. Just like not shopping the car before you buy it. That's dumb. Don't do that.