Study Hall: Car Buying with Christian Charvet

You just realized your business needed to hire someone yesterday. How can you find amazing candidates fast? Easy? Just use Indeed. Stop struggling to get your job posts seen on other job sites. With Indeed sponsored jobs, your post jumps to the top of the page for your relevant candidates, so you can reach the people you want faster. According to Indeed data, sponsored jobs posted directly on Indeed have forty five percent more applications than non sponsored jobs. Don't wait

Earns is twenty twenty one.

We have execution. In order to execute, we have to have information and the number one place that get the information eyl University shotty tell them what we bring in.

Yes, Eyo University has been reloaded. We already have one hundred pass webinars. We already have weekly webinars, We already have our private investment group on Facebook, we already have monthly financial planning calls, we already have bi weekly real estate called. But what has been added to eyl University this year is access to MG the Mortgage Guys home Buyers Blueprint, which walks you through the home buying process from A to Z. And what also has been added

See you on the other side.

My graduates from my school being forced back drop b drop my.

Drop back drop drop. So we're gonna jump right into it, right. So we get a lot of feedback on Instagram recently about leasing cars, buying cars, right now you have a wealth of information being in the car industry for how long, over ten years.

Well, twenty years now this year, actually twenty years in the car industry from the bank to the dealership side.

Yeah, you've worked every every facet, basically every fascet. So all right, so we're gonna get into your backstory. But before we get into the backstory, I want to just jump right into it because people take this like very personal. I notice, it's like a real personal thing. Like it's like, you got like a thousand comments over a video that we're posting and people are like, that's a terrible idea. Should never lease a car? And people are like, no,

Just so we know, like we've done both.

Oh yeah, Personally, I tell my story. Yeah, so my personal journey and cause is when I when I graduate from college, Right, that was my first time getting a car. I didn't have a car before that. So when I graduated from college, I came home and the first car that I had, I wanted a luxury car, so I brought I brought a used Infinity out of G thirty five. Infinity like a couple of years, but it was it was nice car. Cool that Uh So I had to had a G thirty five and it was nice. And

We heard that that that line, Well, it's all right, we don't buy we don't. At least we bought the whole cars you should. We grew up thinking like, yeah, you got to buy a car.

Jay Z really tanged at our ring shot shout out to Jay. I saw a guy. But yeah, he said that line. We don't least we bought a whole call as you should. We like we got by car. That's the mentality he was having. So when I went to the dealership, that the guy he was telling me, he's like, nobody buys called. Everybody that comes here has money. Nobody's

End up our story of the Cimmar Like around that same time, before you had a car, he was driving everybody's car, Like, SHO need your car, So he was driving cars and he I brought it with me when I got my second car was a BMW and we had a crazy story there at the dealership, but I was. I financed it and I got the payment out. They were like, I never forget.

When you crash your car before I got it off the line.

Yeah, we crashed it right, Yeah, as soon as I drove they were like, ah, now just leave it will come back another day. So I crashed it, well, they crashed it as soon as I got it. It was like five hundred and sixty two dollars for the payment. I was like twenty four years old.

I was like, man, you were financing that car.

I was like, well that's a lot. Yeah, I said, that's a lot. But you know what let's just go for it. And like you said, we was cruising it. It was a nice car and year four or five, like those BMW's, they had just changed the body. It was like two thousand and four. It had just changed the body. I got in two thousand and six, and every time something was wrong in the car, like it was the center would go off and censors would go off.

I was.

They were like, we'll give you six thousand dollars for this thing, and I was like what right after six years of pain? And then like the parts, like I said, the parts themselves. Like that's one thing that I learned is like no matter how old the car is, the parts don't depreciate. So like if you bought it in nineteen eighty six, and you need new parts. The parts still cost the same, and I was like, you know what,

I'm done.

I'm never driving his car again. I'm never buying a car again. That's the end of the story. And I literally walked them up the hill and left the car down the street. We never got back back in wild.

So, yeah, so we're gonna go into the details of leasing versus buying. I'm gonna say it for my standpoint as far as owner before. But first I want to give you the floor, right, all right, So can we talk about the difference between leasing and buying a car? What are some key differences in leasing a car and buying a car?

Well, on at least most people, you'll hear that a lot people say, well, you don't own the car, right, But the truth is, do you want to own a vehicle that's going to lose value?

Right?

Very rarely do cars go up in value. So that's why leasing is so prevalent, seventy eighty percent, Like you said, of people lease the vehicles. When you're financing the vehicle, you do, you technically own it, but the bank owns it while you're financing. So until you pay it off, the vehicle still belongs to the bank title the titles held by the bank. You're not the owner of that vehicle.

That's something that's that's a common misconception. You don't own a car the way until you finally pay it off. And then when you do pay it off, most people want to trade it in.

They want to trade it right away old by the time you own it now.

It's old exactly. But another thing with the leasing that people don't fully understand is like for me personally, right, the reason why at least is that I'm a business owner, right, so I get better tax treatment for least in the car. Whereas like with the least I can write off the insurance, the gas and the least payment formula percentage, we won't get too complicated in it. But I can write that

Yeah, absolutely yeah. On a lease, you only pay let's say the taxes right when you're financing in the vehicle you pay tax on the whole price of the car, or on a lease you only pay tax and let's say the monthly payment. Depending on the state and where you're registering the car, Let's say like New York, you're only paying tax on the monthly payment.

Right. So I think that that's something that people could And as far as for me, I don't drive a lot, so twelve thousand miles. I never go with twelve thousand miles. I usually hit like eleven ten to five, So it's perfect for me. But you were saying, even if you do go with twelve thousand.

That's a big misconception. Also, it's a lot of people think that if I drive a lot of mileage, I shouldn't be leasing.

You know.

You hear a lot of people come in and they say, you know, I do fifteen twenty thousand miles a year, I shouldn't you know? Leasing is not for me. I think the contrary. The way I look at it is when you're leasing the vehicle, even if it's a high mileage, least you know your true cost of ownership, Like you said, with maintenance, right, you know that you're gonna have this car three years you're gonna put fifteen thousand miles a year,

Now.

The other thing that we talked about was that technology is moving so fast, so things get antiquated quick. So that's why leasing is nice because in three years you may not need a small sedan right now, In three years, your life changes. You have a family, you have kids. Now I want to suv. My lease is up. I come out of the lising, I go into the brand new suv if I want can't fit quarding anymore?

Exactly.

Yeah, Now that's true. Technology changes even like the few if I have now, like I saw the two twenty twenty mode, I'm like, wait, yeah, that is ridiculous, Like I need that technology now. So it's like you can just come in every three years. Man, that's a that's a huge benefit in leasing. One of the things that is important when you're lease in all finances is the credit Yep, how does that work? Is there a specific bureau that car dealerships use, or the bank.

So it varies between manufacturers, so different banks. So let's say, if you're going to Honda Honda Financial, Toyota has Toyota Motive Credit, Mercedes Benz has Mercedes Benz Financial. They all have different criterias, right, So it's not a blanket as far as what they use. Some people use transunions, some people use echo facts. Other manufacturers use what's called an autoscore.

And another thing I want people to think too. A lot of times people will look at it like, okay, well, I'm not a business owner and we're talking about luxury cars. Just because we have luxury cars, but it's the conversations for any type of cass it doesn't matter. But also people have to realize is that you don't have to be a full time entrepreneur to be an entrepreneur because the tax system. I can't stress this up. The tax system is set up for entrepreneur and investors. It's not

This episode is brought to you by P and C Bank. A lot of people think podcasts about work are boring, and sure they definitely can be, but understanding of professionals routine shows us how they achieve their success little by little, day after day. It's like banking with P and C Bank. It might seem boring to safe plan and make calculated decisions with your bank, but keeping your money boring is what helps you live or more happily fulfilled life. P

Forward, power up fall projects with ego at loaves. Every tool delivers power beyond belief, so whether it's leaves, limbs or long cleanup count on Ego to deliver the power, performance and innovation you need. And now, for a limited time, save up to sixty dollars on select blowers, chainsaws and pull sauce shop Ego today it loves offers dollar to ten to one while supplies last selection varies by location standing.

And like I said, now, if you still choose to do that, then it's your decision. It's free country. But a lot of times if you make decisions based out of ignorance not knowledge, right exactly. So one of the things I want to ask you was you said MSRP versus price, right, what's the difference?

It's selling price, all right? So yeah, so you have MSRP. Right, that's what's on the windowsticker, right, So the manufacturer suggests the retail price of the vehicle. That's MSRP. Manufacturer suggests the retail price. That's what they recommend you should be selling that car for now. The selling price is what you negotiate, right or whatever. However you can reduce the selling price of the vehicle. That's what that comes down to.

Is that the same thing as a cap cost.

So no cap cost. Let's say you're leasing or your finance in the vehicle. The final cap cost is the selling price plus anything else. So whatever money the bank is lending you, whatever it so least or finance, they're still lending a certain amount of money. So let's sayd the lease, if you rolled your taxes into your payment, that's going to add to your cap cost. If you negotiated a fifty thousand dollars selling price and then you rolled your taxes of two thousand dollars into the lease,

So all right, we talked about okay, talk about leasing a car, but buying a car. Somebody wants to buy a car, right, and you were saying most of the time, if you do want to buy a car, it it makes more sense to buy a used cost.

I always recommend people, if you are going to buy a car, buy a certified prince. Now, listen, there's vehicles you can find out these lots that are not authorized, let say Mercedes Benz dealerships or Toyota dealership. Me personally, I think you're better off going to You may pay a couple of dollars more, but you're getting it from the manufacturer, so you have the backing of manufacturers. Just

That's when you got it brand new.

So yeah, when you're buying a car brand new, it initially loses its value when you drive it off a lot or the vehicle is titled. So now you're buying a vehicle, who's going to that's going to depreciate in value. That's what a car does. It's going to go down in value. So you're financing a car that's losing value. It already took a big hit right when you're buying new opposed to a certified pre own that the initial depreciation has already happened. It's already taking place that you

There was another thing that we saw when we were reading it was gap insurance. Now that's something that doesn't come on a finance, but it does come on the lease.

Yeah, New York State leases all have gap insurance. Now what happens. People don't realize that if a vehicle is let's say total or stolen, any negative equity. So if your insurance company says, hey, your car was worth ten thousand dollars, but you owe the bank twelve or thirteen. Without gap insurance, you're responsible for that negative equity. Okay, you're a negative balance, you're responsible for that amount. So that's why all New York State leases will have gap insurance.

All right, So for people that go into the dealership and they don't really know what questions. It's iluent to me because you don't really know if you're gett ripped off or not. You just call me, So like what questions should they ask? Like, how do you know if you're getting a good deal? How can you get the best deal? Everything negotiable, everything's negotiable, So how can you get the best deal?

So here's what it is I mean, and it's the car business has this bad reputation, right, sometimes we make it harder than it has to be as a consumer. Now, if you know there's a vehicle you want, there's so much information out there. You can go online, you can do research, you can find out what the cost of the vehicle is. But at the end of the day, I always recommend trying to buy local. Try to buy where you're going to be servicing your vehicle and they

Right.

If you came to my dealership and you bought the car in Jersey, right, or another dealership, but another customer came in and he bought his car here, who would you expect me to take care of better?

Or first? Right?

If I have one loaner car left, I'm going to give it to the guy who's little to me and he say he's buying cars. As far as the price goes, listen, there's a lot of information online.

You can go.

You can look up what the costs of the vehicles are. I do reckon Comen. Listen. You want to shop around, but at the end of the day, once you have a bottom line number, go into your local dealership say hey, this is what I got. Can you guys match it, get close to it, beat it, whatever it is.

What sites do you recommend, like Kelly Bluebook or.

Kelly Bluebook's great. You know, there's a lot offormation. If you go to Google, you can search, you know, car gurus, they'll give you all types of information.

What about what's the residual value? All right?

Residual values what the bank? The bank sets what's called the residual value. A residual value is the estimated value of the vehicle at the end of the lease. Okay, so that's what the bank is assuming or hoping that the vehicle is going to be worth once your lease is over. Now, that's determined by the mileage, right, how many miles. The less miles you put on a car, the higher residual value is going to be a good. Thing about the residual is that you want to have

Okay? And what about the cap reduction? All right?

Cap cost reduction, that's the money down. That's what your initial investment to bring your payments down. So you'll see a lot of times people come in they say, well, I saw an ad that said three forty nine a month, but in that fine print it said thirty two ninety nine cap cost reduction or money down. So a lot of times people come in they say, well, I don't want to put any money down. That means you're still giving your taxes, your first month's payment, your bank fee,

And sometimes the dealerships have things built in, right, specials like that, Like.

Yeah, there are specials where they have incentives from the manufacturer if they're trying to move particular products. You know, some people come in and say, well, wait a minute, why is this car fifty five thousand dollars and this car is fifty five thousand dollars. Let's say two differ and bran to different models, right, Or maybe an SUV

Is that specific time of year that that happens like I always see, like it's like a summer sale or winter.

Every manufacturer has different sales events, like let's just say from Mercedes normally, then the end of the year is a big time. Also in June and July you'll see some nice sales events. But the way I look at it, it's all based on what you need, right, Depending on when you need your car is when you want to work your best deal. Do the payments fluctuate to a point where it's hundreds of dollars difference between those sales events?

I get it.

People get focused as far as the numbers go. I totally understand it. You want, but my thing is this, we want to give people great deals. We want you to buy cars. Right, It's not about the car business has this you know persona of being like, oh, they're gonna rip me off. That's not the case anymore. Listen. I'm sure there are people out there who take advantage

And then you could buy a car at the end of the lease, right if you want.

Now, you can buy your vehicle out at the end of the lease. That's one thing people ask me a lot. Look, I want to lease this car and I want to buy it.

That was a big fun right went out least with the option to buy.

So my thing is this, if you're going to buy the car, buy the car now, all right. Now, here's the thing. We go back to that residual value. You want that residual value to be high. You almost want it to be unrealistically high, because that means your monthly payment on you're going to your lease is going to be lower. Now here's the thing. Now, at the end of the lease, all of sudden you say, well I'm gonna buy it. You're buying it at that very high residual value. You have the option to buy it at

Back to the bank. That's the other thing too, as far as with leasing a car, the monthly payments are usually lower than if you buy that.

Yeah, call normally.

That's another thing people have to understand too. It's like it's okay not to own everything. For me personally, I don't necessarily want to own a car. Because I'm gonna lose money on it, right, So I don't want to own something that I'm gonna lose value in. So that's like owning a house that you know is going to go down and value of what's the point of owning it.

I'd rather in it.

I have to have somewhere to live. I don't want to own a house where I know if I'm gonna pay one hundred thousand and then ten years it's gonna be worth twenty thousand.

Well that's what I tell people. If let's say there's an area that you want to live in. Well, for whatever reason, the views or whatever is, the schools, whatever it keeps, you want to live there. But let's say the real estate agent said, hey, great news. This house is x amount of this apartment is X amount of dollars, and every year it's going to go down in value. You're gonna say, well, wait a minute, I don't why

Now, there's something called a lease end calls. That's like something that's like a hidden court that I actually found out about. So like, if I have a Mercedes and I lease it, but at the end of the lease, I decide, you know what, I want to go to BMW.

There's a price for that. So they have what's called the disposition fee. All right, there's basically a fee to turn in the vehicle. Now, here's the thing. If you go with another BMW, a lot of times they'll just wave that fee. Right Now, there is a reason why they charge it. It's not just a penalty for leaving

Right, So if I say, there's that course, obviously they waved that for you.

Most manufacturers wave.

I learned that. I didn't know that. I learned that when I was trade my car.

Yeah, that's why I have to stay with Mercedan.

Were trying, man, we are trying.

I got But before we go, I have one other question. I just saw recently online where somebody said that they they sold their car back to a dealership after they leased it. How does that? How does that work?

With that?

So very rarely does it happen where the vehicle has a higher value than the residual value. Okay, so let's say the visual value, like we talked about twenty five thousand, the guy kept it in great shape. You hardly drove it. You want to put minimum knowledge on the vehicle. Car's garage keptain. All of a sudden, for some reason, there's a there's a high demand for that particular vehicle. Let's say this thirty thousand dollars actually the book value for

It back to you.

Now they have some money that they could put towards another vehicle. Also, yeah, said.

That, No, it was it was Matthew knows.

Oh, and that pulled the t pain bought the one million.

He didn't. He lost. He lost thousand.

He blew the engine or something like that, and he sold it back to the dealership. He lost one thousand.

Other years, well, he brought the car and then sold it six months later.

Yeah, I mean, it's rare that that happens, you know, Like I said, cars are depreciating assets. It's very rare that that'll happen. My graduates from my school being forced bad.

Drop bag drop Mike, drop bag drop drop.

You just realized your business needed to hire someone yesterday. How can you find amazing candidates fast? Easy? Just use Indeed stop struggling to get your job post seen on other job sites. With INDEED sponsored jobs, your post jumps to the top of the page for your relevant candidates, so you can reach the people you want faster. According to Indeed data, sponsored jobs posted directly on Indeed have