Is it okay to have a car payment and how to avoid and not alone.
Welcome to the Frugal Friends podcast, where you'll learn to save money, embrace simplicity and life. Here your hosts Jen and Jill.
Welcome to the Frugal Friends podcast. My name is Jen, my name is Jill, and today we are replaying an episode that was very popular several years ago and that we think is super important because Jill and I, while we both paid off a lot of debt, we then both acquired car payments for different reasons and we still have those. I think it's been two years since this episode aired and we are still same. Everything we said aged well and we still believe it.
Yeah. I mean this was a pretty pivotal episode for me because in the past, and you'll hear this me say this, but I've always bought used for cash and
the world changed and my perspective needed to change. And I think that's what happens to us as we move through life, not holding so rigidly to certain ideas about money, specifically debt, giving ourselves permission to understand the financial choices that we're making so that we can feel good about them and make them guilt free because we believe debt is neutral, and this is one of those episodes that's going to underscore.
That for you. And as tariffs loom, we are not sure how they'll take effect. If they'll take effect one of the industries, they would possibly impact our cars, and so I think it's very start now to learn about what you will need going into your next car purchase, if you're going to be taking out alone, which ninety nine percent of people will and honestly should.
Okay, But first, this episode is brought to you by Jenn's birthday.
Woo woo, woo woo. Today is my birthday, not the day we're recording this, but the day the sairs.
Happy birthday, Jennifer.
So she's older, she's wiser, she's more beautiful, and she's more sure of herself. That's right, folks. Confidence comes with age and really just generally not caring that much what other people think about you.
So there's one thing they say about me, it's that I don't care.
Welcome to almost forty, Like how good the chapters are in the book, she wrote, She's so confident and sure of herself about that. By what you Love without going broke, we both wrote it, but she loves what she wrote and I must have been.
They are good.
They're good chapters.
If you want to see for yourself and help Jenni Ford her life and till her next birthday, get your copy at buy what youlovebook dot com.
This is so true, Jen.
Oh wow, Yeah, I am confident. I am very confident in the chapters I wrote in the book, and buying it will help me afford to live another year. Yea, this is so This is the best gift that you can give me, is getting I mean getting our our spending planner for yourself or getting a copy of Buy What you Love without going broke. It supports me on my birthday and helps you achieve your goals in your life. And really that's the best gift for me, is you
achieving your goals. But that doesn't pay my bills.
And just yeah, and just supporting Jen and her goals.
Yeah, support me and my goals of I don't know, they change every year. Sleeping to the night, sleeping through the night. I woke up four times last night. Oh no, two for the dog and two for now. It's too much a five year old, it's too much Okay, but let's get into what this episode's really about. I'm so sorry. It's about transportation. So we have a couple other episodes that you really should queue up to listen to after
this one. The first is a recent episode. You just have to go back, like twenty episodes or something that's ridiculous or math. It's fifteen. I'm so sorry. Uh commuting with an e bike in any weather with Kevin Hak. This was not a widely downloaded episode for obvious reasons. It's not saving money on groceries. I think everyone should listen to it, though. I think everyone should listen to this episode because moving away from a car could be will save you more money than getting a better rate
on a car loan. It's let us tickle your brain with that episode. You know that episode.
I not think it's for you, but just let yourself be tickled.
Yes, it'll save you more money than anything we say on this epist episode will so let that be enticing for you, and then also save money on your next car purchase with the car Chick. That was episode two thirty three. But you can just search the Car Chick Frugal Friends and that episode should come up a lot of car buying tips. It's post COVID, so the car tips are still really relevant.
Okay, let's get into this one. So this first article comes from bank Rate and is titled what to Know about Auto Loan Debt, And I just even appreciate the title because it is not making a good or bad statement about auto loan debt, which is a great place to start to just remove the shame from it. What is a good decision for one person may not be a great decision for another, and so we just want all the information to make the best decisions for ourselves.
What this article goes through, and we will go through it with you all, is when an auto alone is not a great idea, and when an auto alone might be a good idea. So kind of looking at it from both sides. So first off, when an auto alone is a bad idea is if you can't afford the car.
Yes, And this isn't just like we don't imagine that most of our listeners are going out there and looking at the Tesla's and the BMW's and the Cadillacs. We know that's probably not you if you're listening to this show, but it doesn't mean even if you're looking at the Toyotas, the Hondas, it doesn't mean that you can afford every single one. And this is specifically for new cars. There's
been a lot of like recently. So one of the changes was is for a time, used cars were about the same price as new cars, and so everyone was like, just by new, just by new, just by new. It's not that case anymore. And people are still saying that because Jill and I both have bought cars from dealers. I just bought one last month, Jill Yours was just like a year ago. So we have heard all of these things, and you're still going to be paying that.
It's back to where you're going to be paying that that instant depreciation when you drive it off the lot and it loses two grand.
Yeah.
Yeah.
I think there can be people who get caught up and only looking at the monthly payment versus the overall sticker price of a car, and I think that can push us outside of our budget if we're only looking at the monthly payment versus the overall costs. And reality is is if the if it has a high sticker price, you're going to be paying even more than that. If you're taking out a loan for and what you're going to pay an interest potentially how long you end up
paying off that loan. So first look at the overall cost and if it causes.
Just like a deep sinking pit in.
Your stomach, I mean really all cars probably will do that. But if you absolutely know this is not going to be a car that is within my lifestyle way of affording things, then don't go with that one. Don't allow the monthly payment to push you into a car that you wouldn't otherwise choose. But then from there, yes, make sure that the monthly payment is something that you can afford.
And so Experience says that the average monthly payment, which is Experience is the credit bureau that a lot of car dealerships will use, so they know they know what everybody's car payment is, and for new cars it's around seven hundred and for used cars it's about five twenty five. And actually asked when we bought our car, what is the average that people finance, and he said it was about seven hundred. Wow, so this is.
A lot like that is inching close to rent. I mean obviously rent is way more than that, but like that, this then potentially could be your second biggest expense in what might have used to be the third or fourth biggest expense for people.
Yeah, and that's where we are. That's yeah, it's definitely the climate that we are in right now. So we don't want to say it can be like it was in twenty eighteen. But you don't have to relegate yourself to that seven hundred dollars payment just because that's what's average. You also don't want to just take out a clunker. I see a lot of people kind of saying the opposite, to just buy a quote unquote clunker, which don't really exist anymore since the Cash for Clunkers program started what
like decades ago. And then you know, so you don't go into debt, but that's also not a wise decision for most people.
Well, you also want to consider the other costs of owning the vehicle. How much are you going to be paying in gas, monthly insurance, registration renewals if you live in a state that requires emissions an inspection, that's on top of your monthly auto loan payment. So that is huge to be keeping in mind when you're making decisions and signing papers.
Yeah, so you need to be looking at the total cost of the car, not just the monthly The next is it's not a good idea if the interest rate is too high. The interest rates for auto loans, they used to be so reasonable, so reasonable, and now they're quite high. So we would typically say that any loan under five percent, you don't have to like set your pants on fire paying off because you can get more
in the stock market. That's general wisdom. And it is hard to get that now, even with excellent even with an excellent credit score of eight hundred, you cannot get less than a five percent interest rate on a loan. I know this. I know that. So it has shifted a bit, so the interest rates are much higher than they used to be. But so this has become a kind of loan where you do want to focus on paying it off fairly quickly.
It is.
It will be probably a priority, even over some student loans. If you're paying off debt and you have to get a car loan, you may have to pause other loan payoffs to focus on this one. But it doesn't Again, it doesn't mean you have to put everything on hold and stash cash to pay cash for a car. It doesn't mean that either. Yeah, it just means that it will shift some things for you. But one of the ways you can lower that interest rate is to lower
the number of months. So like, the three shortest terms tend to be about the same interest rates, so you don't have to take the shortest, but taking a shorter term and putting more down, so pausing other savings goals to stack up some cash to put as much down as possible.
Yeah. The final reason that they state for why an auto loan might be a bad idea or when it's not the best option is if you're going to be stuck with a long term loan. So, like Jen's saying, often car loan terms are between thirty six to eighty four months. That eighty four months obviously being way longer, which some might opt for because it makes the monthly payments more affordable, But the catch is you're paying far more in interest and the higher extending Yeah, you're extending
the life of that loan. So that's another thing to keep in mind. As much as you can minimize the length of the loan getting the best interest rate possible, these are the things that are going to help make an auto loan be a better, more wise decision, and just things to be wary of when in the car buying situation circumstance.
Really, if you can't afford the payment at forty eight months or less, then you need to be looking at a less expensive car. So forty eight months is four years. We all want to say, oh, I'm going to keep this car from drive it into the ground. You don't know that. You really can't plan to do it, plan to keep it for five years. If you keep it longer, then that is a financial gain. That is a financial success.
But if you keep it for less because of an accident, or because your family grows, or you move somewhere I don't know, then it is not not that much of a financial loss. So really you need to be able to afford everything at for thirty six or forty eight months. So when to get an auto loan? So if you want to build more credit, one of the parts there are several parts of a credit score, and one of them is credit diversity and an auto loan. If you just have like a credit card and student loan, your
experience won't say you're very diverse. But if you add a mortgage and an auto loan. Then it says you've got a diverse credit history, it's not a big part of your credit score. So I don't one hundred percent agree it says it accounts for thirty five percent of your credit score. Sorry, no, it's saying on time payments account for thirty five percent. Like that's way more. On time payments are what's going to improve your credit score,
no matter what they are. So I would say, do not take out an auto loan for the credit portion of it. Take it out because you want to have that money allocated for something else, and it is more financially beneficial for you to take out more of a loan than it is to use your cash for that. Now, if you're using your if you take out a loan, so you have more cash every month to buy lattes and shoes, and those aren't your highest priority things. That's
not the reason to get out a car loan. But yeah, I wouldn't do it for the credit reasons.
The next reason that an auto loan could be a decent idea or a way to make an auto loan more advantageous for us the purchaser is when we're putting down a hefty down payment. They reference that it's not going to be a great idea to use up deplete all of your savings, especially if it's not a true emergency,
just to circumvent monthly car payments or interest rates. You're better off just making a hefty down payment, putting a significant amount down on the car to reduce the amount of the auto loan that you need to take out, and then being able to keep some of that cash on hand for the other unexpected emergencies. This is one of the things that I was saying was so difficult for me to kind of overcome in my mind when I realized the car buying situation is different than it
had been for the majority of my life. I am so accustomed to paying cash in someone's backyard for their used vehicle, just kind of a private sale person to person. We found it on Facebook marketplace, and we could walk away with a car between six to twelve thousand dollars and that was a reasonable amount to pay in cash. Those days are over, and this hurts to.
Say, unless you're unless you're okay getting a car that's like ten plus years old, like that would be very Yeah.
It's even still though the amount of money that you still have to pay versus what it's actually worth and how long that car is going to last you. So then it was okay, but am I willing to pay now thirty thousand dollars even for a pre owned vehicle? And then it started to face the reality that that's not a great idea to do. If I have thirty thousand dollars of you, assuming we are not independently wealthy.
If you've got stacks on stacks, then sure, fine, do whatever you want with thirty k. That probably feels like chump change. But for someone like me who makes a very average salary household income, if I have thirty thousand dollars stacked away, that's not going to be the best use of that just to avoid a monthly car payment. So I really had to reorient myself. Similar with our renovations, like there comes a point where it makes sense to cash flow, and then there comes a point where it
makes sense to borrow money. This is just like my realization and hot take, especially when it comes to investing and saving for retirement, our money can go further, especially for US medium income earners, we need more time to save for retirement versus shoving all of our money away. There's definitely emotional decisions at play here too, and you're going to need to make your own decisions for what's going to make sense for you. But this was the
big thing for us. Of Okay, it's just not even if we had it, this would not be a great idea to put all of that money towards a new vehicle. But the workaround for us, just like this article is suggesting, was putting a decent amount of cash down so that the amount of the loan that we had to take out was significantly less.
Yeah, I totally agree it is. It is a different landscape and it is not as bad as what it was a year and a half ago. So we have to get out of that too. That like kind of despair that you know, we're just going to have to spend thirty forty grand on a car. That's just what it's going to cost. No, because I was just in there last month and got a three year old minivan like great stuff for twenty five So it is a choice. Ultimately, did I have have to get the kind of car
I want? Could I got into Sedan for less? Yes? But also I wanted the doors that open automatically with a button, you know.
So.
There it is. This is a super personal decision.
Yeah that I think we have to weigh all of our other life circumstances up against what is the reason for purchasing a new car, What do the rest of your finances look like? What are your other big goals to do with your money in the next few years? Like, all of the answers to those questions are going to shift it for each person. You know. For us, we were in an emergency situation. We had one vehicle, that
vehicle's breaks went out, like what to do now? So and for others it might be, well, yeah, I don't love the landscape, and I could wait another one to two years and stash up even more cash for this to pay down, you know whatever the auto loan might be,
So lots of different directions we could go. I think the biggest thing I want to highlight with this is being aware of these pros and cons that this article is highlighting when it's not a great idea, when it could be a great idea on how we can make the most of that situation.
Yeah. The last thing on this list on when to get alone is when there's a deal on financing, and that's mostly for new cars. So I'm not gonna, I never will probably recommend a new car for anybody, and that's just personal. There's some people that a new car is a high value for them and they will pay that. And so if that is you, then finding deals on financing, especially at the end of the year. They have some
good deals that that could be useful to you. But I would say the best thing on this list is when you have the cash reserves but you need them for something else besides putting them all into a car, especially if I mean in this kind in this I don't I hate saying like in this economy, but it's a good It's a better idea to have your money in your bank and have a car payment than have all your money tied into a car and like no money in savings except for your you know, two to
five grand in an emergency fund. That's that's not a smart move. So to think that's the best reason to get an auto loan. And so yeah, now we're going to head into our second article. Yes, so this next one is how to avoid taking on too much car loan debt. And I don't know if you could have inferred it from the first article. But both Jill and I have auto loans. We'll let the cats out of the bag open. We're starting the lightning round early. We
both have them. So that does not mean that we love debt contrary to popular belief.
Or that we're telling you to get an auto loan. If you can find a work around, go for it. But we also want to help create permission for this because it's different times.
Friends.
Yes, and this just might.
Be the reality of what needs to happen. If we're not living in a city where we can take public transportation, or.
Or you're in your early twenties and you can afford that fifteen year old sedan and that's good for you, then that's great. When you are at different stages of your life, different things become priorities and you follow those. So what's right for me may not be right for you. But just because one person says something is gospel doesn't mean that it is. You've got to take with a grain of salt where it's coming from. And so we
don't want to do that. We really want to just talk about ways to get creative no matter what situation you're in.
So This article comes from Finder and they say how to avoid car loan debt, or most of it really is like how to not take on too much car loan debt. They also talk about how to pay off your loan faster, what some of the benefits of a car loan can be, what to watch out for. So it's definitely chock full of some helpful things. I would recommend checking it out if you are currently in this process. We're just going to go over some of the bigger
highlights of it. The first thing that stood out to me under the category of how to avoid too much debt is to do your research, so knowing the type of vehicle that you want, and then spending a decent amount of time on the Internet and in talking with people to compare specs and pricing. Of course, the internet's going to give you the most information as far as
what to expect with pricing. What is that same year with that type of vehicle, with all the different specs, the type of engine that it has, all of those things, and what can I expect for pricing. Like you'd be surprised if you haven't done this recently, how much it can vary from dealer to dealer what they are selling
that same type of vehicle for. So that's just some basic information that can help you to avoid getting hosed on some of the pricing, to have a really good idea for what can I expect to pay what would be a reasonable amount of money for this type of car?
Yeah, And I would say pay specific attention to fees. So I used True Car and I was able to inquire about pricing on cars and then get a breakdown of car fees, you know, dealer fees, et cetera. And there are some dealers and I'm going to get more into this in the lightning round to do you worry, I have a story. So there are some dealers that will just charge their dealer fee and it's a thousand
bucks and you can't get away from that. That is, that's something All other fees are negotiable, and if they won't negotiate them with you, you can go to another dealer with more transparent pricing. And you should, yeah, because there are enough dealers out there today that have caught on and are just charging their transparent price plus their dealer fee, and they're being open about it. There are enough of
those dealers where you can go buy from them. You don't have to be subject to these dealers that are still charging like fifteen different like fees that mark the price.
And if time is on your side, I would recommend taking a couple of weekends to shop around, to test drive, to research, to compare, and not just making impulsive massive car decision.
Yes, absolutely So. The next one on this list is that I will talk about is to compare your financing options. So it behooves you to get pre approved for an auto loan before you go in. You don't have to have the car. I would say, take whatever your budget is and add ten grand to it and just get pre approved for that. Not saying that you should expect to pay ten grand over budget. I'm just saying, like, get pre approved for it. Because the credit unions will
be offering the best terms for a car. So if you're not a member of a credit union, now is the time to join one, And I would I would call the dealers that have cars that you're interested and ask them what credit union they have like a direct relationship with. So when we went in, we were actually lucky enough that the credit union that we use regularly
is the credit union that these dealers had. The two dealers that we checked out had a direct relationship with, so we were able to I was already a member, we were able to do the financing right in there. I got preapproved through the credit union, but it was easier just to take out that same credit union loan with the dealer. It's the same loan. It's just I didn't have to get a check from the credit union
and bring it in sort of things. But they honored the rate that I got, and they actually honored the new car rate that I was approved for, yeah, instead of the used car rate. Used car rates are usually higher. So that was really really great.
Oh that's cool.
Yeah, So definitely do your research about credit unions. Become a member at your local one, the one that has the best rates currently on used cars, and they will typically when you go in there, even if it's not the same credit union or the same bank, they will honor the interest rate on that term with any other thing, because they want your business and they want to do the financing in house. They want to get it done right then and there, so they're going to honor whatever
you've been preapproved for. Yeah.
The other way obviously to avoid taking on too much debt with a car is considering the less expensive car option or used cars.
Just like Jen already.
Said, we will recommend used, certified, pre owned, whatever you want to call it, where you're not immediately experiencing the impact of it depreciating when you buy brand new and drive it off the lot and it lose is ten thousand dollars worth of value. You don't need that, but of course make your own decisions. But if you're wanting to look at how can I reduce this cost as much as possible the vehicle without all the bells and whistles, the vehicle that's been used, and you can find some
great ones. It doesn't mean that you're buying a super old car. There's plenty of people out there who lease vehicles for a couple of years, hardly put any miles on it, and suddenly it's a pre owned car that feels brand new to you.
Yeah, exactly. So the other ones on here kind of reiterate what we were talking about. So avoid spending more than you can afford. This one says avoid loan terms that exceed five years. I go with four because I'm more conservative. Usually the three and four year terms are going to have the same interest rate, so double check it. Though. If you can get a lower interest rate with a thirty six, you want to go with that one, even
though it's a higher monthly payment. But if they're the same, you need to at least be able to afford the four year one. Yeah, and sometimes even when we were in there, three, four and five were the same. It was when you went above five that the interest rate increased.
And if you do happen to need to take on a loan that does have a little bit higher of an interest rate, then paying off the loan faster is still an option for you. Even if you signed paperwork for a four to seven year loan, that doesn't mean that you can't pay it off sooner as you come across the room and your budget to be able to do that. Of course, making that sizeable down payment is going to really help. Looking at when you can make
lump some extra payments to it. Even tacking on a little bit each month or breaking your monthly payment down into two times a month can also help to pay down the principle of the loan. Even looking at refinancing once you're in a different place can be a really great idea to see. Okay, if interest rates are shifting, then it could be worth your while to refinance for a lower interest rate.
Yeah. Credit unions can also refinance auto loans to get that rate down. So maybe you're making payments for a year and your credit increases, maybe fingers crossed, maybe rates decrease.
I don't know.
So if the stars aligned and you're able to refinance, then definitely try to do that. But I think you are going to get the most bang for your savings buck by going with a car that you can afford the three or four year payment. So just basically getting a less expensive car. Is that going to take more time to find? Yes? Are they out there? Absolutely absolutely. It does not have to be be flexible, like don't you don't have to get like a Junker to be flexible.
That is something that I learned because really for me, when we were shopping it, for me, it was like top of the line, and for Travis it was bottom of the line, and we really had to come together find that radical We really had to find that radical middle, and it ended up in an affordable vehicle that had ninety five percent of what I wanted. And I'm very very happy with that.
With the loan, do you know what has one hundred and twenty percent of what I want? And I'm happy with all the time, always and forever.
Oh my gosh. It would finance till the day I die if I needed to, but would never have to the Bell of the week.
That's right, it's time for the best minute of your entire week. Maybe a baby was born and his name is William. Maybe you paid off your mortgage, maybe your car died, and you're happy to not have to pay that bill anymore. Beck Bill Buffalo Bills, Bill Claion, this is the bill of the week.
Hi, Jen and Jel. This is Amanda calling from New Brunswick on the East coast of Canada, and I just pressed submit on my final bill for my Capital one MasterCard. I paid off over seventy five hundred dollars in six months and today it's the beginning of January twenty twenty three, and I did it. I'm so excited. Thank you for all of your health and I have just changed my life.
Thank you so much. Bye, oh yeay, Amanda. Congratulations that seventy five hundred in six months. That is insane. That credit card debt is the debt to get out of there. That's the debt to get out like.
Your pants are on fire.
That's over one thousand dollars that you hang.
Through at this credit card debt. And well done, Amanda, and I'm glad that you chose to celebrate with us in the.
Bill of the week.
Yes, I love it. I love it so so much.
Thanks Amanda from New Brunswick. If you all listening, happen to be another Canadian listener, you know you're just from the United States, want or any other country. Oh, we love it. We love it when you call from all over the world or outer space. That'd be fun. If you happen to pay off debt or lower a bill, or you're happy about a bill that you paid, or you know me.
Your name is Bill.
Visit Frugal friendspodcast dot com, slash Bill, leave us your bill.
We're here for it and for you. And now it's time for light rap.
You know we got to four star review the other day because our intro music is corny.
Yay, I know that makes me happy.
I'm pleased by it. I've never had a bigger compliment in my life.
No, yeah, I think they probably just meant to an acts are Yeah, yeah.
I know it was an accident, but thank you to the pre lip for the corn. We like corn. Yeah, all right, so we're gonna oh, this one is so juicy. You've been waiting for this, and I talked about this story on an after show on a previous episode. But you all are.
Ready your golden tip for a first time car buyer, Jen, give it to us.
We will at juice. Okay, corn juice? Yes, all right, that's weird. Okay, So my tip for a first this okay, I'm not even it's not even first time. It's for everyone in this climate right now. To recognize sunk cost bias, say more so. Sunk cost bias or sunk cost fallacy is common in frugality. It's or even in personal finance. Whereas, because I have sunk time or effort into this, I will not give it up, even if by the law of diminishing returns, it is no longer returning what I
am putting into it. It is valuing the time spent or the energy or effort spent more than the actual outcome.
Give us an example.
So I bought a car recently, and I really wanted this one van that was at this one dealership, but I didn't want to just go to that dealership. I wanted to test something out. So I found another van that was very comparable at a dealership closer, and I just went in to test drive and get the experience before I went into this other one. So I went in, test drove it, did this all by myself too, and and then left. And that was I gained the experience.
I got their deal and that's what I thought. You know, okay, cool, this is this is the experience. Now I know. And next day I go to the dealership with the car I really want. And mind you, these cars, these vans that I test drove, were the same exact price online. They were both twenty five k I think there was maybe a five dollars difference between the one was like twenty four nine nine and the other one was twenty four nine nine five. Yes, so four dollars, yes, yes, yes.
So I went to the dealership with the one that I really wanted. And the difference between these car these bands was the one that I tested of the first day was a few years older but had like less than half of the miles. Oh okay, so this one. So, this one that I really wanted. It had more miles, but it was newer, and it had the luxury like package. It had the leather, it had all the features.
You know, more miles but more interesting.
Yeah, but leather leva. So but this is the one I really wanted. So I go in test drive and then I sit down at the negotiating table and I'm ready for this because I've listened to the episode with the car check, and I've written the e books on negotiation. I know how you are prepared.
Your sleeves are rolled up, and they don't know what's coming.
They absolutely don't know what's coming for them because they they put all of these fees. So when I was talking about hidden fees and fee transparency, while the first dealership was like this is the price, and this is our dealer fee, and this is this is it, this is it, and I was like, yeah, one thousand dollars
dealer fee, that's standard this place. And then I had my trade in that they gave me the value for this place had a reconditioning fee, which was basically me paying for them to get the car ready to sell, which I thought was ridiculous. And I called it superfluous, and they hated me for that where they kept using it.
I was like, they wanted to give you a for star.
The manager was like, I would describe as ancillary, and I was like, oh no, it's superfluous. I was like, I know words. And so they had that fee, and then they had my trade in value, but on the sale, like the deal sheet, they took off two thousand dollars from it because the car was over eighty thousand miles.
So instead of just giving me a fair and transparent value of my car, they were trying to deceive me by giving me one, by making me think I was getting more from my car, but actually I was getting less.
And then they had another like bonus that canceled out a fee, and another but so they had another fee, but then they gave me a bonus to cancel that out, and so it was just so murky to where by the end of it, I spent an hour and a half to negotiating with this dealer for this van that I really wanted, and the whole package came out to four thousand dollars more than what I was going to pay for the other van that I had seen the day before without no negotiating, right, and so I was
very close to signing the papers for that van, very for the more expensive van. When Travis and I looked at each other and we were like, what are we doing? I realized that I had let the sunk cost bias the time that I had spent negotiating, the time that I had spent desiring and thinking about this car. I had let that sunk cost bias almost lead me to paying four thousand dollars more yeah than an almost identical.
Yeah, and you're not alone in that.
No, But that one decision two. I mean, we had like signed the deal and I was about to give them my social Security number I think I had, but we hadn't signed any papers to like buy the car yet. We just you know, signed off that the deal was final. We got up, we.
Left, thankfully. You had the excuse like we got to go pick up our case.
I did. We did use that, I mean, we did have that excuse we had to go pick up kai. But that decision as uncomfortable it was as it was, and I felt bad for wasting their time, Yeah, which is so silly. I felt bad, but it saved me four thousand dollars.
Oh, this is such a thing to keep in mind with any purchase, any big purchase, whether a home purchase, an investment purchase, or renovation purchase, car purchase, Like we can find ourselves kind of paying more or buying something we don't even want because of that sunk cost bias
that can come upon us. I think it's helpful in listening to your experience, even thinking about having an additional person there, like the fact that you had Travis to also look to and say, wait a second, like just that checkpoint, so you can kind of alert each other to Oh, I think this is happening. I think this is happening.
What about this?
What about that, whether that's a spouse or a friend or a parent, somebody else with you, because we can get sideswiped by some cost bias or just people, yeah, dealerships or the seller kind of pulling one over on you or talking you into additional packages that you don't need.
Like there's just the decision fatigue factor too.
Yeah.
Yeah, And it's worth buying a friend dinner if you don't have a partner who's very money conscious, somebody who is a third party who you respect their financial savvy bringing them with you and just buying them a really nice steak dinner when it's all done.
That could I mean, that could almost be even better than bringing a spouse because they're not emotionally invested, so like they may not even feel as bad to like question the deal, well.
What about this cost? What about that cost? Because they're not the ones purchasing the vehicles, it's no skin.
Off their back. And this can be overlooked when we are jumping straight into financing a car and getting an auto loan, because four thousand over four years, broken up into twelve payments is not a lot. But we want to look at the total cost to own. That's what we said upfront, and that's what's going to make the biggest difference when you are focusing on the total cost to own, not the monthly payment, and that's going to
save you the most. That is, and we may not be able to pay the full amount, or may not want to pay the full amount, maybe want to put that money into other places, but you can still save a lot on your car and your auto loan by looking at that full price. Because that's I calculated six hundred and sixty six Lattes that I don't have to feel bad about turning down.
Yeah.
Yeah, so I have alleviated over six hundred decisions from my life by making the right decision one time.
Yeah.
The tip that I would give to people purchasing a car first time or otherwise, definitely by used. We've talked about that already, And definitely do your research, not just oh what's the pricing across the board, but your research on the cars in as unbiased way as possible. So rather than searching just for example, like is a two thousand and six Subaru Forest or reliable, you're gonna get the answer like that's a You're gonna get the answer that you want on the internet. You can't get the
answer that you are anywhere. And so, of course, if that's the way you're asking it, people are gonna be like, yes, I love my Super Forester, it's so great. But if you ask, what are the issues with a two thousand and six Subaru Forest or any vehicle. I'm just using my personal experience as an example. She had a really bad experience with the DF super Forster. Yes I did spoiler alert.
Then you are.
Going to get the answers from the people who and as you see themes of what is the issue that that car had? Am I willing to take on the
repair costs for whatever those issues might be. And also recognize that you need to do your research on the specific type of car that you're looking for, not just the make and model, but the year as well, because there could be a make and model of a vehicle that across the board is really decent, but that particular year twenty eighteen is the year that XYZ went on the car, and it could be why you're finding such a great deal on that year of that car is
because it's experiencing that issue. So do very specific type of research. And I think one of the things that I see people who are not super knowledgeable on vehicles do, again, whether first time car buyers or otherwise, is just like identifying a car that they think that they like and like going with that, rather than doing research on what are the best vehicles on the road, what are the
most reliable makes and models of vehicles? And asking friends like chances are each one of us has someone within our circle who is more of a car expert than we are and ask them, hey, what do you think?
What do you know about this type of vehicle, So picking, you know, asking people within your community as well as doing your own research rather than just getting your mindset on one particular car, because it really could be that there's a lot of issues that come up with that vehicle or it might not be the best for you for xyz reasons and just when in doubt by a Toyota.
Yeah, unless it's a twenty nineteen rev for but so and if you take one thing away from this episode, let it be this. Start it carcomplaints dot com so you don't have to worry about your googling skills. Start at car coomplaints dot com. It compiles user generated complaints on the site and then also the National Highway Transportation Safety that the complaints there as well, and it will tell you make and model, which of the years have the most complaints, what the complaints are, which of the
years have the least complaints. And you want to take the newer years with a grain of salt because they have fewer years to be able to accumulate. But if you're like me and you're looking back and I'm like, I wonder, what's uh one of my twenty sixteen Hyundai Tucson is compared to all the other Hyundai Tucsons and finding that it's one of the five worst cars like that year and that model, one of the five worst cars Hyundai has ever produced.
And you won't know that unless you purchase the car or you do your research ahead of time. Much better do your research than to find out the hard way carcomplaints dot Com.
They don't pay us to say that, but they have paid me so many times over from the money I've saved. Thank you guys so much for listening. And I hope that this helped you if you are on the fence of buying in cash versus getting an auto loan. I hope it helped you save money potentially on that auto loan if you were already set and just looking for tips.
And again I want to reiterate episode four ninety four ninety four commuting with an e bike with Kevin ha and then episode two thirty three saving money on your next car purchase with the Car Check. Those are the two episodes to listen to next. So thank you so much. If you've read our book by What You Love Without Going Broke, which we mentioned at the top of the episode, Thank you so much. We would love it if you
could leave review on Amazon. That would be so helpful, Like this one from CC The Financial Book for the Rest of Us five stars. This book gives real world, real life advice for the lay person to make the most of their money. The suggestions are realistic and don't make you feel like you're missing out financially. Their advice allows you to both save towards goals and indulge on what you like within reason. There's great balance here. I'm
more than just put your money here or there. This is about changing how you think about money and spending and saving on what's important to you. I highly recommend both the book and listening to the Frugal Friends podcast. Thank you for the shout out for the podcast too.
Yeah, thanks Ceci, and thank you all so much for listening to this show. If you enjoyed this podcast, please also take just a short minute and leave us a rating and review. If you've read the book, please also leave us a rating and review. There all of it helps us. Yes, and also again, it's Jen's birthday, so
show her some love one way or another. Okay, here's the ways you can show Jen some love for her birthday and if you can leave a rating and review on the podcast, you can leave by your Apple for the book Amazon, you can buy the book buy what you loovebook dot com. You can follow us on social media Frugal Friends podcast or at weekly money Move because we have another Instagram account. We're giving you money Move every Monday. You can sign up for the friend letter Frugal Friends Podcast.
Okay, options, I've just got to have the options. They got to know what you're doing.
Whatever you do, if you post it and tag Modern Frugality, which is my Instagram, I'll send you a virtual hug is what I'll do. It's one of those hug emojis.
You gotta remember, this is what you promised them, Jenu.
You can remind me. Just be like if I don't send it to you, be like, where's my hug? Amo g Yeah, and then I'll remember.
Okay.
Bye. Frugal Friends is produced by Eric Sirianni.
Birthday Plans. You had told me a while ago what you want to be doing.
I hope that I do make it happen. There's a lot of time between now and then a few weeks. It is just a few weeks.
Isn't it until you cross over into being closer to No, wait, have we already?
How old are we? Jill?
Wait, Jill and I are the same age right now?
Are we thirty six? Or are we thirty four?
Thirty five?
Okay?
And I thought, okay, yeah, turning thirty six crossing over being Yes, so I was turning crossover on my birthday being closer to forty than to thirty. You'll spend several months telling me I'm old, old, and how you are a young vibrant.
Souls and then bring chicken.
And then in August you will be thirty six as well.
Let me live in my bliss.
Well yeah, three months, three months, three months of bliss, pure, I will be closer to thirty than to forty, or at least right on the edge.
Yeah.
So I want to get my girlfriends together, no kids on a Saturday mid morning and go to a coffee shop and either play games or do crafts. I want to, I really want to do crafts. Like where do you want to get together at a coffee shop? I haven't decided which one, so the TPT and yeah, I just want to. I just want to have like a morning with ladies without kids. Where we all can get away from our kids like it is a refuge for all of us. You're still invited, even though you have no one to get.
Wait for me. I can leave all my worries and troubles behind.
You can leave all your worries and troubles behind. Yeah, okay, and I will leave my children, who are all of my worries and troubles, but that I love greatly.
Cannot wait for that. That sounds so exciting.
What a good idea and good good inspiration for other people who.
Are still here listening.
Because I am tired at night and I don't want to go out at night, That's what I don't want to do that because the sun goes down and I'm in bed. Mornings are Yeah, we're that for you now. I'm about six thirty am every morning, six fifteen this morning.
That's before the sun too, I know. Yeah, so okay, yeah, that's who I am. Thirty six. Happy birthday, Jem.
Thanks