How Rich People Buy Cars vs How Everyone Else Buys Cars

Two men wait for an oil change at the same dealership. One pays $885 a month on a two-year-old SUV. The other is worth over six million dollars and drives an eleven-year-old sedan with a cracked windshield. The difference between them starts with one question. Greg did what most car buyers do. He walked in, answered the salesman's first question, what monthly payment are you comfortable with, and drove home owing $57,900 on an SUV a dealer would have bought back that night for about $40,000. Seven years at 7.4 percent comes to $76,359, more than $16,000 of it interest, for a car worth around $18,000 by the final payment. Leonard never answers that question. He picks the car before he sets foot on a lot, asks for one out-the-door price by email, buys three years old with a check, says no to everything in the back office, and drives it for close to a decade. Then he keeps writing the car payment anyway, just not to a bank. This video runs the real numbers behind both ways of buying a car: How the four square worksheet lets a dealer move the price, trade-in and down payment around underneath your monthly payment Why stretching a loan to 84 months makes an expensive car feel affordable How negative equity rolls from one car loan into the next How much value new cars lose in the first year and within five years The finance office extras: extended warranties, paint protection and gap insurance What Thomas Stanley's research found about the cars American millionaires actually drive The rule wealthy buyers use before buying any car What about $600 a month becomes after 10, 20 and 30 years at 7 percent When rich people do borrow for a car, and how a 0.9 percent loan can work for you instead of against you Whether you're about to buy your next car or still paying off the last one, this is the math that never shows up on the window sticker. This video is for education only and is not financial advice. Loan figures are illustrative; your rate, taxes and fees will differ.