My moronic car-buying advice that saved us $3,315

Oh look, a troll comments on my YouTube video (whom I somehow overlooked):

“wow another dumb video form a moron.  So you are trying to say the dealer will give you the rebates if you get outside financing but wont if you get dealer financing?  LMFAO!!!!   Thats the funniest thing posted on youtube.  Keep up the funny videos.”

Look, if you’re trying to butter me up, at least bring me some popcorn and a beer, sweetheart.

Actually, this reminds me of a Seinfeld episode where Jerry is dating an Olympic athlete and after they sleep together, they both decide it’s just not working out. Katya (the athlete) says, “In my country, they speak of a man so virile, so potent, that to spend a night with such a man is to enter a world of such sensual delights most women dare not dream of. This man is known as the “Comedian”. You may tell jokes, Mr. Jerry Seinfeld, but you are no Comedian.”

Look, I may not be a comedian, and my jokes on Youtoob may s*ck *ss, but… I do make a mean financial plan.

Moving right along.

Yesterday, I gabbed about how car manufacturers and dealers sometimes use cash back incentives and rebates to play with the price of the vehicle and “hide” interest expense. GM is famous for doing this. They will offer buyers 0% financing or higher APR and a cash back incentive if you buy the vehicle (now! Now! NOW!). It's amazing to me that people still don't catch onto this, while others prefer to live in denial about it.

Anyway, sometimes, the deal is really clever… they offer maybe $1,000 cash back, but don’t reduce the price of the vehicle. Which means the dealer is effectively giving buyers a $1,000 loan that the buyer has to repay at interest.

It don’t take no genius to see what’s going on there. But you do have to be looking for it. And it’s not just car dealers and manufacturers. Lots of businesses have gotten wise to this tactic and offer something similar. Each deal is just a little bit different and often these businesses get very creative so it’s not immediately apparent what’s going on. 

Like when Apple introduced its Apple upgrade program so that you could buy your iPhone on monthly installments for a year then trade up to the newest iPhone and it made it look like you're getting a discount somehow (you're not).

Why they do this?

A million reasons.

One reason is the perception of interest. People do this to themselves. Near everyone believes making interest payments is bad and so any way you can lower interest payments and APR on a loan, the more attractive the offer looks.

It’s a great way to shoot yourself in the foot by focusing on the non-essentials of a deal. People are also conditioned to believe the more you pay for something, the better it must be.

Again, a great way to potentially shoot yourself in the foot.

There’s that old saying “you get what you pay for” which I generally agree with but of course the details matter (and so does context). Sometimes, you don't get what you pay for. Sometimes, things are cheap because they're low quality. And sometimes they're cheap because of some new manufacturing process that made them cheap. There was a time when LED lightbulbs were $50 a pop. Now? You can buy good quality bulbs for a few bucks and the quality on modern LED lightbulbs is better than when they first hit the market. It was the same story with plasma T.V.s, desktop computers (and later, laptops), laser printers, microphones, refrigerators, medicine, and anything else driven by technological advancement.

If you’re paying more for something just to pay more for it or because the price rose as the interest rate fell, then… you might not be getting higher quality stuffs.

Anywho, regardless of whether you pay a high or low interest rate for something, there is a way you can profit from the deal and in some cases, pay yourself the interest (or at least some of the interest) you would normally pay to a bank, credit union, or some other lender.

My wife and I used this same strategy when buying our car and it saved us a buttload of interest… but it did more than that. It allows us to put those interest payments into our personal savings instead of giving them to a lender.

I write about how anyone can do the same exact thing all the time on my email list. So, if you want the goods, you know what to do.

David Lewis, AKA The Rogue Agent, has been a life insurance agent since 2004, and has worked with some of the oldest and most respected mutual life insurance companies in the U.S. during that time. To learn more about him and his business, go here.