I recently saw a video about the shady things that car salesmen do to trap people into car loans,

and it has over a million views, which tells me this is probably a pain point for people.

So we're going to watch it, and I'm going to give you some of my takes on the tricks that he's exposing, which I so appreciate this.

All right, before we get into it, make sure to like, subscribe, and show the episode with a friend.

Okay, so let's first take a look at how he explains the car payment cycle and the cost breakdown.

Here it is.

So once the salesman gets you on the hook, he takes you back to his desk to talk numbers. As we all know, this can be an annoying back and forth process where you tell the salesman how much you want to spend. They run to their manager in the back. They yap about basically nothing because they already know what their price is going to be. Then the salesman comes back to you, provides you the new numbers, and this goes on and on until you agree on a price. Now, if you're not paying cash, this is where the greatest trick comes into play, the monthly payment. For some reason, our simple little brains are only concerned about short-term pain, and we will do everything we can to avoid it. This includes spreading out the cost of an item over a certain number of months to avoid paying the full amount

today. This is the same thing as the buy now pay later programs I mentioned in this video,

but with a car it can get even worse. Let me show you the car math that schools never teach you,

but dealerships know completely by heart. A new car loses roughly 20% of its value in the first year,

another 15% in year two,

and 10% more in year three.

Meanwhile, on an 84-month loan, you're only paying about 12% per year towards the amount you owe.

The rest is all interest.

This creates an equity gap that leaves most buyers owing $7,000 to $10,000 more than their car is worth by year three, which is why nearly one in

four trade-ins involve negative equity from the previous car.

Basically, people are stuck in a debt spiral with no real way out.

So let's look at an example.

This is a 2025 BMW 3 series that's listed for $50,000.

If you were to put down 10%, which is pretty standard for auto loans, you would pay $5,000 today, which means your loan will be worth $45,000. If you were to put down 10%, which is pretty standard for auto loans, you would pay $5,000 today,

which means your loan will be worth $45,000, which sounds somewhat reasonable. Your salesman will then

suggest a 72-month loan, and assuming the 7.5% APR we're currently seeing in the market, your monthly

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