Joining us right now is host of KFIS How to Money every Sunday at noon, and a guy I listened to.
While I am prepping my Sunday afternoon.
Program, Joel Larscar. Joel, always an honor to talk to my man. Thank you so much for glad, glad to be with you. Christ Yeah, man, thanks for carving time out. I appreciate that. Uh.
Can we talk about the big story first?
As we talk about our finances and how we're saving money, these auto tariffs are going to have, I say, a ripple effect that's going to hit not just the new car market, but also the the pre owned inventory is going to see a bumping price as well as demand for pre owned goes up. I think more people are going to hang onto their vehicles, which means fewer h fewer cars entering the pre owned market.
So I think that's gonna happen.
And some people are I think taking they're taking the wrong tact and they're thinking, oh, I better buy a car now before the price goes up.
Yeah.
No, you're you're spot on, and you're you're really what you're you're you're getting at here is the cascading impacts,
like the second or effects of these tariffs. And so yeah, it's really easy to spot the first order impact, which is cars that get imported into the United States are going to be more expensive, in particular new cars, right, and so some models built one hundred percent in the United States, like Tesla's, we likely won't see any meaningful price increase, although once other cars start to go up in price, Tesla might say, hey, we can raise our
prices too and garner a little more profit from this deal. But yeah, you're right, the second order effects of these tariffs are going to mean the cars across the board go up in price, and car parts in all likelihood will too.
So I think it's really it's really.
Important for people to not say, oh, these tariffs are coming in April. Third, I should buy a car by by the end of the month, a brand new car, spend tons of money, so I can save a few thousand bucks because yeah, estimates are some of these models are going to cost five, six, seven thousand dollars more once the tariffs are in place. But the other question, too, Chris, as always, is will these terraffs actually be implemented or
is this more talk? And that's just another thing that consumers have to grapple with.
Well, that is a really great point too. Is this all the negotiating factor that's going to go away here soon or not? Are we?
I would It would stand a reason then if parts are going up, that the price of service on our vehicles is going to increase too. If you've got the you know, a broken actuating blinker, I don't know, then then you may see that that price jump up a little bit more too when you take it in to have your car repaired.
Yeah, And it's interesting the length of car ownership has been growing in this country, which is something I like
to see. Like, I'm all about owning and maintaining older vehicles, but I think when people you have to go in and see the mechanic and there are repairs that they have to do to their two thousand and nine Honda or something like that, and they see like I was literally just talking to a friend last night and he's like, I got to get this my old Suparu running, And I was like, what's it gonna cost?
Like eight hundred bucks? He's like, no, like fifteen hundred bucks.
And there's this there's this connect between what we think it should cost and what inflation's actually done to the real cost of repairing those cars. But I will say, when you think about paying that fifteen hundred bucks, it's emotionally difficult and it's financially difficult. But what's more financially difficult for most Americans is signing up for buying a new car. Signing up for that car payment that on average is now in the seven hundred and fifty dollars range.
And even to get a payment that low. Lots of folks, you're talking about at least a six year long car loan. So that's Hey, that's two months of a car payment. When you think about it like that, I might want to keep the car that I've currently got on the road. Plus it's saving me money in other ways.
I agree.
Joel Larsgard, a host of KFI is How to Money every Sunday at noon on KFI. So, Joel, when the price of a new car goes up, and then subsequently the price of the ustar all the things that we just talked about, does that mean that the insurance companies are going to start charging us more too, because they obviously they've got more they'd have to cover.
Oh, I mean for sure, yeah, when the price when the value of the car is higher, and then your car is damaged and the cost to repair that car.
We've already seen it, even aside from tariffs, we've seen it with electric vehicles, and just when an electric vehicle is in an accident, let's say, the battery pack has to be replaced, we're seeing insurance rates on electric vehicles go up across the board because as the cost to repair that versus the cost to repair a traditional gas vehicle, where you know, the main engine, let's say, isn't typically impacted unless it's a really severe accident, but the engine
of the EV is, so you're going to have to replace that battery, which is incredibly expensive. And then talking about car insurance, man, there's these fascinating stories coming out about vandalism to Tesla's, not just dealerships, but to people, individual owners of Tesla's, And there are a lot of predictions right now that we're going to see specifically Tesla owners targeted with insurance price hikes. Shouldn't even use the or targeted, because it's not like it's a nefarious thing
trying to harm anybody who owns a Tesla. It's really just about. Hey, there's greater risk now because of some of the political violence happening towards against Tesla owners. Even people who like own Teslas, who say I don't really like what Elon Muskin is doing, they still might be at risk of having their car keyed or something like that, which could lead to an insurance claim. So yeah, I think the insurance companies it makes sense they might be raising those insurance rates on Tesla owners.
Well, that sounds like no fun in other words, right telling me is everything's going to get more expensive?
Yeah, you kind of didn't sign up for that. And I think, actually, interestingly enough, I think a lot of Trump voters didn't think they were signing up for this, and so it's going to be interesting again to see whether the tariffs come about or not. When you kind of look at the overall trends where consumer confidences and stuff like that, a lot of people are saying, oh, this isn't shaking out quite like I thought it was going to. And I thought I was voting for lower prices.
I thought I was voting, you know, to see a president who is going to like boost the economy, and tariffs have the opposite effect. I mean, this is just a widely known economic reality that tariffs create higher prices for consumers. And I think there are maybe occasionally reasons geopolitically to impose a tariff.
I'm not a political expert, but when you when you look.
At like what comes down the pike and what's heading down the pike, what's what's coming our way? As you know, people who buy stuff in the United States of America, it's going to be it's going to be higher prices, and specifically on vehicles, and then there there are other cascading effects to those tariffs too.
So yeah, Joel, why is it then that if it's widely accepted as a fact that tariffs drive up the cost of goods, why why is the White House so adamant that no, it's gonna have the opposite effect, It's.
Going to be really great and everything is going to be better for us.
It just feels like that flies in the face of what ninety five percent of experts say.
Yeah, and then that's a that's a really good question. I don't know why they.
Think there really.
I think I think what the belief is is is that, hey, if we make it more expensive to buy these cars, that are made that are made in other countries. Then what's gonna happen is the US car industry is gonna boom, and we're gonna build more stuff here in the United States of America. And so it's kind of this belief that we are losers in terms of global trade. And then if we institute more tariffs, what's gonna happen is
it's gonna We're gonna see job boom. We're going to see more factories open in the United States, We're going to produce more goods and services here in the country. And I think they might be right to a certain extent on the fringes, but I think the overall approach
is completely incorrect and that we overall as Americas. We think about avocados from Mexico, Hey, guess what if we if we right, if we teariff the mess out of those avocados, it doesn't mean like the abundance of avocados that we currently have in this country.
It's just it's gonna vanish like or we're gonna pay a lot more for them.
And and yeah, maybe some US producers are able to see they're able to see greater profits, and maybe compete with those Mexican producers. But overall it's it's a lose lose for consumers, and it's going to raise prices, all right.
Joel Larsgard, who loves his Mexico Joel.
I happen to see that Congress is looking at capping the amount of interest that credit cards can charge me. And I believe there is already a cap, but it's it's something like thirty percent or somebody of that sort. But now there's proposals to cap credit card aprs at something like ten percent, which as a consumer, that sounds pretty good to me, but not everybody's on board.
Well, it's interesting. It's kind of bipartisan.
There there are people from both sides of the aisle that have proposed different caps on credit cards what they're able to charge consumers, Republicans and Democrats alike. And so this is one of those things where there's kind of a meeting of the minds and they're saying and it's interesting. There have been proposals over the years to say, oh, it's app credit card interestrates at eighteen percent.
Actually, let's make it fifteen percent.
And so these different bills have been floated and the latest kind of mind meld here is to say, let's cap credit card interest rates at ten percent. And it's funny that people in Washington tend to agree on this because I disagree wholeheartedly with this attempt, because it sounds so nice and it sounds so empathetic to say, hey, we know you've got credit card debt.
It's a big pain.
And credit card interest rates, as everyone knows, have gone up significantly. We're talking about average credit card interest rates nearing twenty two percent now for people. And if you've got significant credit card debt, that's one of those I mean, it could take you decades if you're paying the minimum every single month to pay that credit card off.
And so I sympathize with that.
But the problem is if you institute a ten percent rate cap, I think there are significantly worse things coming down the pike, like there is no free lunch, and why not five.
Percent if we're going to do ten percent.
When you start messing with what credit card companies are able to charge people in terms of interest rate, you might actually let some subprime borrowers. And in fact, CNBC said something like ninety five percent of subprime borrows wouldn't have access to credit cards anymore.
So's they're basically.
Barring a huge segment of the population, for me being using credit cards at all. If something like this goes through, and they might have to turn to even more nefarious kinds of debt. Talk about second order effects of something that sounds good on its surface but underneath could lead to even worse.
Outcomes for a lot of people.
So you're talking about things like a payday loans or something like that that could that's interesting.
Yeah, I mean, I think a lot of people if the credit cards ripped out of their hands, and you know, we might say, oh, credit cards, it's not great that people pay twenty two percent interest. And that's something I talk about regularly on the shows, like, only use credit cards if you can pay them off on time and in full every single month. And if you, you know, use them and you feel like you can't do that and you need help. I try to talk about that too, where to go to get that help to pay off
your credit card debt. But I just I don't like the potential downstream effects of having some sort of credit card rate cap because I just think it's going to lead to people turning to more nefarious places to get that money that they need.
Am I mistaken that there are rate camps already though, something like thirty percent?
Don't? I don't believe so.
I think the only rate caps on credit cards that are that are in effect are for military service members. So I believe there's like a thirty six percent cap interest rate cap for people who served in the armed forces, But I don't think there's any interest rate cap for credit card companies in general. And you know, the other thing too, is there is competition. It might seem kind of weird to say, but there is competition in the
credit card industry. And when you think about going one of the things that credit card credit cards from credit unions will tend to offer is significantly lower interest rates on credit cards or there are you know, ballots transfer offers that often allow you to pay zero interest for like fifteen or eighteen months, so it's not like you're always, let's say, you know, stuck forever it paying twenty one
percent interest. Those interest rates they also move with what, you know, what the FED is doing, what the Fed's up to, and just interest rates in general, so you might want to I think it's people want to point the finger or politicians at least do at the credit card companies and make it seem like they're incredibly greedy. But a lot of people do really well under the credit card system. There are kind of the haves and
the have nots. Some people earn a lot of rewards and they don't ever pay a dime, to be said, in MasterCard or the banks that issue those cards, and then other people man they lose out because they're not handling credit cards well. And so I want to talk about credit card hygiene less about changing the way the system is constructed, because I don't necessarily think it's out to get anybody.
See this is why we listen to How to Money with Joel Laarer's card every Sunday at noon on kfive. So what's your take on the consumer confidence reports that came out and it says a twelve year low, so Americans are increasingly worried about the future of the US economy.
Yeah, I mean, I think so much depends how you view the economy.
For the most part.
When you look even at some of the surveys of how consumers felt based on their political allegiance, it's amazing how it flip flopped the day that the right after the election or right after the inauguration. So I think sometimes people think about how the economy is doing through a really political lens, But then I think everyone right now is starting to feel the basically like the reaction to their own habits. I think we've gotten used to buy now, pay later in this country. It's something I
rail against. It feels like it's everywhere you can now by now, pay later a burger on grub Hub, which is.
Just utterly ridiculous. So I think it's partly habits.
And then I think we're also we're kind of reading the writing on the wall with and some of the economic policy, and I think there's just a general sense of malaise in this country right now, even though I think there is a lot to be hopeful. That's got to be part of it.
Yeah, did you ever think you'd see a day that you could take out a.
Loan for a burrito? No?
No, I didn't, And it kind of baffles me. But I think that the more we offer products like that, like credit cards, started it right and it was like, oh, you don't actually have to pay for the thing that you want right now, and we've taken that to the nth degree and it just sets people up for failure and you forget, you know, what you're buying. And like, we're paying so little attention to our financial futures because it's all about the present. And I just think that
makes us unhappy. But it also it makes us poor too, which leads to more unhappiness.
Right, Yeah, we're after that, Yeah, chasing that short term gratification. Joel.
Love listening to you, man. Thank you so much for your insight and your wisdom on these things. Thank you, mich Yeah, thanks for Chris, appreciate it. Yeah, of course. Yeah.
Joel Larsgard, host of kfis How to Money every Sunday at noon. Find him and follow him on the socials at How to Money Joel at How to Money Joel