Long time ago, my wife and I hosted a Christmas party where we had a bunch of new guests — kind of like “friends of friends” on Flakebook, but in the flesh.
Anywho, to get to know everyone a bit better, we played this little game called “2 truths and a lie”.
You go around the room and each person takes a turn telling 3 short stories about themselves.
2 of those stories are true and one is a lie, and… everyone else has to guess which one is a lie.
I love this game for a couple reasons:
- I get to know people I don’t know, quickly. And not just surface level stuff. I get to know how people think and little details about their life they probably don’t talk about very often. Mucho cool.
- I get to practice my B.S. detecting skill. Most people are (fortunately) terrible liars (myself included). But… some people surprised me with the yarns they done spun. I, however, did not surprise anyone and in fact got called out on my fib by a young lady who was some kind of lie-detection-psych expert in the military. Ouch.
Speaking of spinning yarns, one of the things I’m always on the lookout for in the news media are financial lies mixed in with elements of truth.
- Good credit gives you access to lower interest rates and;
- Paying a lower rate on your loans means paying less interest, which is why;
- Car dealerships offer the lowest rate for new cars to borrowers with good credit (AKA the special financing, 0% financing offer).
The first 2 statements are true in a certain sense… good credit does allow you to qualify for lower APRs on loans. Low interest rates do mean cheap financing, too.
But do dealerships necessarily offer you the best financing deal?
I looked at this a few years ago. A local dealership was offering special financing on a new Toyota (I think). We could buy through the dealer at 0% but if we paid cash or brought our own financing to the table, we would get cash back… they had a bunch of incentives which would lower the net cost of the vehicle.
Manufacturers and dealerships tend to offer these “special” financing deals to make it look like you’re getting something (a car in this case) for nothing (no interest payments). And, since lots of people want something for nothing, it attracts lots of buyers. So, what they do is they offer 0% APR on a new vehicle and jack up the price of the car OR… they’ll give you cash back (selling you the car for a lower net price) and you can finance it some other way. The cash back is where they “hide” interest you’d normally pay for a loan. It’s much easier to get people to buy a car that way than to tell them a vehicle is $$25,000 plus a $5,000 finance charge spread over 5 years. People hate paying interest on loans so… just make the APR 0%… somehow.
There is no free lunch.
But… there is a way to turn the tables and self-finance your next vehicle. That way, you pay yourself the interest that would normally go to a bank or some other lender. My wife and I are doing this right now and so are my clients (those who need new cars, anyway). If you want to learn more about it, go join my email list, now.