I'm going to go over why your car payment is keeping you broke. We are going to look at the 7 myths to car payments and why your car payment is keeping you broke. We are going to bust the 7 myths as to why your auto loan is keeping you broke and I will go over the best way to deal with each myth so save you the most amount of money.

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in this video, we are going to go over why your car payment is keeping you broke, we're going to look at the seven myths of car payments that are keeping you broke. And before we get started, I just wanted to tell you that we will be using the average car price for our examples, which according to Kelly Blue Book, in May of 2020, is $38,900. So I'm just going to go ahead for simple numbers, and round up to $39,000. So we're looking at our myths, and we're looking at our examples. That is where I came up with the car price, just the average car price in May, for 2020. Alright, so the first thing we're going to do is we're going to jump straight into myth one and myth one is that my car is a good investment. So what I want to do is take a look at the rate of depreciation for new cars year over year, according to Kelley Blue Book, and let's determine, is it actually a good investment. So if we look here, the average car price in May of 2020 is $39,000. So the minute that you drive it off the lot, it loses 9% of its value, which is $3,510. So now the car is only valued at $35,490. After one year, it loses 19% of its value, that equals $7,410, which leaves a value of $31,590. After two years 31% of its value, that equals $12,090, which makes the car value only $26,910. After three years 42% of its value, which is $16,380 with a total value of $22,620. After four years, it loses 51% more than half of its value in four years and then depreciation on that is $19,890, which means the car value is $19,110 and then five years, it loses 60% of its value, the total depreciation is $23,400, for a total value of $15,600. Again, this is supplied by Kelley Blue Book. So the idea that your car is a good investment could not be further from the truth, literally in just four years, it loses over 50% of its value, 51% to be exact, that is massive, that is actually the exact opposite of a good investment. So what I would recommend is if you're going to purchase a car, purchase a car that is around five years old, therefore someone else has taken that massive loss on depreciation and find a car with the lowest amount of miles. So if you were thinking that your car is a good investment, I hope that you can see by the first myth, this first example, that it is not a good investment. The next myth is that 0% interest is the same as cash and while that can seem true, because 0% interest means you're not paying interest, you're paying the same amount as if you paid with cash, it is definitely not the same as cash and the reason for this is because you can easily become upside down on a loan. So if you look at the example in the previous myth, and the rapid rate at which the car depreciates if you only put a small amount, even a decent amount down whenever you start adding up your payments over time and literally car payment terms have become so long, that there will become a point if not immediately, that you can become upside down. So the myth is 0% interest is same as cash, While it's partially true, it is definitely not true and the worst kind of loan you can get is 0% down, 0% interest and you're thinking, Wow, this is amazing, I can have this nice car, I didn't have to put any money down, I am paying the same as cash. I mean, who wouldn't do this literally, the second you drive that car off the lot, you are upside down and I've even seen loans where people don't have to make a payment for six months. So zero percent down, no payment for six months, this is a really bad deal and it is definitely not the same as cash. Because now you're looking at massive depreciation, before you even start paying on that car. So if your car gets totaled, if you get upside down, and you want to sell it, because you can't afford it anymore, or if you can't make the payments, and it's going to get repossessed, when you are upside down, that means you owe more than the car is worth and that can equal trouble. So just be very careful when you start seeing things like 0% interest is the same as cash

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