The Smart Way To Buy Cars (Bank on Yourself) (Infinite Banking)

Summary

The video script advocates a smarter approach to purchasing cars and preparing for retirement, challenging traditional banking advice. It suggests using a cash value life insurance plan to finance major purchases, thereby avoiding bank interest and taxes while leveraging compound interest. The example given illustrates how instead of losing money on a car's depreciation, one can actually gain by using their own funds, ultimately increasing financial control and retirement savings.

Takeaways

• 🚗 The speaker proposes a smarter way to purchase cars that challenges traditional banking advice on wealth growth and major purchases.
• 💼 The concept is based on using a cash value life insurance plan to finance a car for a client's son, with the aim of financial empowerment.
• 📊 The average American spends more on cars than they save for retirement, indicating a need for a more strategic approach to car purchases.
• 💡 The idea is to use a properly structured cash value life insurance plan for guaranteed no-loss, tax avoidance, and uninterrupted compound interest growth.
• 🔢 The example given is a $30,000 car financed at 4.99% interest over 7 years, resulting in a total cost of $35,616 when paid in cash or through a bank loan.
• 📉 The depreciation of the car is highlighted, with the car being worth only $10,000 after 5 years, leading to a loss of $25,616.
• 🏦 The traditional method of financing through a bank is criticized for being expensive and for not allowing the use of one's own money.
• 💰 The alternative is to 'be your own bank' by borrowing from the cash value life insurance plan, keeping the money within one's financial control.
• 📈 The speaker emphasizes the ability to earn interest on the same money in two places with a properly built plan.
• 🔄 At the end of the 7-year period, instead of losing money, one can have access to $45,616, including the car's resale value.
• 📚 The speaker's book, 'Taming Wall Street,' covers this strategy in detail and offers mentorship for implementing it in one's financial life.

Q & A

What is the main argument presented in the video script against traditional bank loans for purchasing cars?

The main argument is that traditional bank loans for purchasing cars result in significant interest payments and loss of money due to depreciation, ultimately leading to a net loss rather than building wealth.

What alternative method for purchasing cars is suggested in the script?

The script suggests using a properly structured cash value life insurance plan as an alternative method for purchasing cars, which allows individuals to use their own money and potentially avoid the losses associated with bank loans and cash purchases.

Why is buying cars with cash considered a 'terrible way' according to the script?

Buying cars with cash is considered a 'terrible way' because it involves spending a large amount of money upfront without the potential for any return or investment growth, and it does not leverage any financial instruments for potential benefits.

What are the benefits of using a cash value life insurance plan for purchasing a car as mentioned in the script?

The benefits include never losing any money on the investment, legally avoiding taxes, and the ability to grow money every year without interrupting the compounding interest calculation.

How does the script define the 'smart way' of purchasing a car?

The 'smart way' of purchasing a car, as defined in the script, involves borrowing from a cash value life insurance plan, making payments over time, and ultimately having access to the original amount plus any gains, while also owning a depreciated but still valuable vehicle.

What is the potential downside of trading in cars with car dealers when one is upside down in their loan?

The potential downside is that being upside down in a loan means owing more on the car than it is worth, which negatively impacts one's financial situation and compounds against them, leading to further losses.

What is the significance of the number '84 months' mentioned in the script?

The number '84 months' refers to the seven-year time frame over which the car loan payments are made, highlighting the long-term financial commitment involved in purchasing a car through traditional means.

How does the script suggest one can recoup the money lost on a car purchase?

The script suggests recouping the money by using the cash value life insurance plan to borrow against the money, allowing the original investment to continue earning interest as if it were never borrowed, and by selling the depreciated car to contribute towards the next purchase.

What is the potential financial outcome after seven years if one follows the script's advice on purchasing a car?

Following the script's advice, after seven years, one could potentially have access to the original car purchase amount plus any gains, plus the value of the car sold, resulting in a significantly better financial outcome than traditional methods.

What is the author's goal in presenting this alternative method for purchasing cars?

The author's goal is to educate viewers on a smarter way to manage finances, particularly for major purchases like cars, with the aim of strengthening their financial situation and preparing for retirement more effectively.

How does the script address the issue of car depreciation?

The script acknowledges that car depreciation is inevitable but suggests that by using a cash value life insurance plan, one can mitigate the financial impact of depreciation by leveraging their own money rather than losing it to bank interest.