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@itsreedgraff·October 30, 2026·273 views

Should you pay cash or should you finance?

Traditional wisdom is often wrong here.

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Full Video Transcript

Here's how to do it right, as explained by a third-generation car dealer. On a $30,000 car, the second you drive it off the lot, you're going to lose about 10% of the value. All right, over time, after 1 month, it's going to be worth about $26,000.

Over 72, about 18. And over 96, about 16. Now, the car's going to be worth the same if you finance the car as well.

But, the reality is that if you finance at a low interest rate, you can sweep the money that you would have otherwise spent on the car into a high-yield savings account or to the stock market and gain interest on that car. So, if you look here, if you're paying $428 a month, you sweep the rest of the money to the bank. After your first month, you're going to have earned about 170 additional dollars.

After the second month, you're going to earn about $8,551. And on the after 96 months, you're going to earn almost $10,000 that you would have otherwise not had been able to access. Like and subscribe for more uh car and finance tips.

>> [snorts]

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How Does Dealership-Based Financing Work?

There are two different ways dealership finance cars and one of them is way more controversial. So how does the loan actually work behind the scenes? First is indirect lending where you come to us for a car, we send your application to dozens of competing banks at once including one captive manufacturer bank like Mazda Financial Services or Toyota Financial Services and because those banks are bidding against each other for your loan, we'll find you the most competitive rate and the winning bank pays a dealership commission or a flat fee just for originating the loan. Second is buy here pay here financing. These are the no credit no problem loans and it's something our family dealership generally stays away from. They're generally associated with the most predatory or aggressive dealerships. They'll price your loan super high and expect the loan to default and they'll put tons of GPS trackers throughout the car so that when you do defaults on your loan, they can repossess the vehicle, keep the down payment and resell that same car all over again. That being said when run professionally and with real underwriting, large groups like Clay Cooley have used in-house financing to help subprime buyers and grow super fast as a dealership group. For most buyers having 20 banks compete is always cheaper while in-house financing is strictly kind of last resort to rebuild credit. But what about pre-approvals? Actually do you walk in pre-approved from your own bank? Subscribe so you don't miss

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When should you trade in your vehicle?

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Should you buy in cash? Pt.2 Because the first one kind of sucked.

What if you could drive a $30,000 car for 8 years for only 4 grand? When you buy a car, you pay in cash or you can finance. And according to the internet, the choice is pretty obvious. Right? Every finance guy says pay cash to avoid paying interest, which isn't bad advice, but there are ways to use your money smarter. Buy a $30,000 car in cash and the second you drive it off the lot, it drops 10% to $27,000. By year six, it's worth about $18,000 and by year eight, just $16,000. You avoided interest, sure, but you locked $30,000 into a sinking asset and lost $14,000 in value. Now watch what happens when you finance that same car at an incentivized rate like 0.9%. Instead of handing the dealer $30,000, you park that cash in the stock market earning 8% and pull the $428 per month payment straight from that account. Month one, your investment beats out the loan interest by $171. By year six, the loan hit zero and you still have $8,500 left over by the market. Put that back on the graph. For six straight years, your investment growth cancel out the car's appreciation. After 8 years, your net worth is $26,000 instead of $16,000 making you $10,000 richer than the guy who paid in cash. But how do dealers actually structure these rates? Subscribe so you don't miss it.

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