05.13.26 The True Cost Of 401(k) Loans / A New Era in Auto Sales

Summary

The Clark Howard Podcast: Episode Summary

Episode Title: 05.13.26 The True Cost Of 401(k) Loans / A New Era in Auto Sales
Air Date: May 13, 2026
Host: Clark Howard
Co-Host: Krista (and others from Team Clark)

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Episode Overview

Clark Howard zeroes in on two timely financial themes: the hidden dangers and true cost of 401(k) loans, and the changing landscape of car buying—including how digital disruptors like Amazon and Costco are transforming auto sales. The episode mixes deep dives with practical listener Q&A, focusing on Clark’s central message of saving more, spending less, and empowering consumers with actionable advice.

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Key Discussion Points & Insights

1. The True Cost of 401(k) Loans

Main Point:
Many Americans face financial pressure and are increasingly turning to 401(k) withdrawals and loans, but the long-term costs can be devastating for retirement security.

Highlights:

• Record Withdrawals:
  “Recent stat from one financial house said the withdrawals were at a record high last year.” (01:13 Clark)
• Behavioral Economics:
  Clark explains why Congress made it easier to access 401(k) money:
  “If I am given a choice ... and they tell me ... you can't touch [the money] till age 55 or 59½ … a lot of people would say, I can’t take that chance ... So, the theory is, if people know they could never touch the money, they won’t contribute at all.” (02:15 Clark)
• The ‘Mad Money’ Trap:
  “[401(k] has become so easy to withdraw money from ... people are treating it as a mad money account and the consequences are ugly.” (04:32 Clark)
• Clark.com Tool:
  Before taking a 401(k) loan, Clark recommends using their online calculator:
  “We have a tool we’ve developed at clark.com ... we’ll show you what the long term consequences are to what your life will look like later when you hit retirement age because you took that money out.” (05:03 Clark)
• Clark’s Forked Tongue Metaphor:
  “That’s why I speak a fork tongue ... I say, you can put money in the Roth IRA and if you had to have it, you can get it, but don’t do it.” (05:53 Clark)

Listener Q&A: Should I Use a 401(k) Loan to Pay Down My Mortgage?

• Listener: Lucas in Oklahoma, age 25, asks if he should borrow from his 401(k) (6.25% interest, all interest goes back to him) to pay extra toward a 6.5% mortgage.
• Clark’s Response:
  “Don't do it ... your 401k ... look what the compounding effect is over time and it grows tax free. … Just keep doing what you're doing ... an opportunity will come along ... where you’ll have an opportunity to refinance that mortgage into a better deal.” (07:38 Clark)

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2. Digital Wallets & Online Payment Safety

• Pays Wallet Email:
  Mark in California asks if there’s a reason to use Citi’s new Pays Wallet with his Costco card.

• Clark’s Advice:
  “If you're going to do a wallet and you're an iPhone person, do Apple Pay. If you're on an Android, do Google Pay ... I don’t know why you’d want a Pays Wallet anyway.” (09:39 Clark)

• Removing Credit Card Info Online:
  Amethyst in Pennsylvania can’t delete her credit card from a prescription site and wants tips.

• Clark's Advice:
  “That’s why I love one time use credit card numbers ... So when I shop online at an online merchant that I don't normally use, I always give them a virtual number ... it's always easier to prevent a problem than to try to solve one.” (12:22 Clark)

Memorable Team Banter:

• Virtual Numbers Not Always Accepted:
  Clark shares a family story about his attempts to use virtual card numbers for streaming subscriptions, only to be foiled by company tech:
  “I put in a virtual number and somehow their system knew that it was a one time use only number and rejected it.” (13:55 Clark)
• Clark's Legendary Frugality:
  Team laughs about him using a free conference call, which cut off an important family meeting, drawing exasperated remarks from siblings:
  “A number of adult kind of words that were thrown at me, all involving the word cheap.” (14:59 Clark)

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3. A New Era in Auto Sales

Main Point:
The auto industry is evolving from high-pressure, opaque dealership experiences to streamlined, digital-first buying—thanks to Tesla’s model, Carvana, Costco, and now Amazon.

Key Insights (18:42 – 25:56):

• Why Dealerships Frustrate Buyers, Especially Women:
  “Women feel that they are treated disrespectfully at a lot of car dealerships ... the business has been going through slow motion change for 30 years.” (18:45 Clark)
• Tesla’s Disruption:
  “When you buy a Tesla ... you go on tesla.com ... you build the car online, it tells you the price. You pay a $250 nonrefundable deposit ... The whole process at the center ... is under five minutes.” (19:29 Clark)
• Carvana & 'No Games' Buying:
  “Carvana ... is now doing exceedingly well ... because people like the simplicity and the straightforward nature of buying.” (20:13 Clark)
• Amazon Auto Expansion:
  “Amazon now has Amazon Auto ... now their corporate sibling Kia is in it. Mazda, Subaru, Chevrolet and Jeep ... not quite as clean as Tesla or Carvana, but a lot cleaner than the normal [dealership] grind.” (21:14 Clark)
• Costco’s Analog Program:
  “Costco Auto is a program where … you decide you want a particular brand ... they will tell you who the Costco dealer is in that area ... no games, stated price up front, no gimmicks, and dealers mess with people at their great peril.” (22:56 Clark)
• Advice for Best Price:
  “The best deals go to the savviest shoppers. ... You want an itemized list of all junk fees and taxes ... so there’s nothing when you get there later.” (25:36 Clark)

Listener Reactions & Advice

• Could You See Buying a Car from Amazon?
  • Krista: “Yes. ... I bought my last car online. I love it. I never want to go into a dealership.” (26:00 Krista)
  • Clark: “Not your thing?” (26:09 Clark)
  • Krista: “No. Last time was ... in my 20s and I cried in there.” (26:10 Krista)

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4. Car-Buying & Leasing Questions

EV on a Budget

• Listener: Shirley in Alabama
  Wants a used Tesla for under $15,000.
  Clark:
  “If you look at even the lowest end model of Tesla ... the ones that are going to be in the teens are going to have ultra high miles on them ... Look at Consumer Reports reviews of used electric vehicles ... Hyundai has been pretty innovative with electric vehicles ... there are a lot of used Hyundais running around out there that are going to be cheaper to buy used than an equivalent Tesla.” (26:31 – 28:19 Clark)

Elderly Parent Needing Short-term Car Solution

• Listener: Jasper in California
  Mom, 80s, needs a car for 1 year, doesn’t want to buy, lease terms too long, options?
  Clark:
  • Recommends Sixt’s monthly car subscription (about $700/month, all-inclusive).
    “Sixt ... has a subscription model ... when she's done with it, your mom can just turn it back in. … It's the best deal going now for people who are needing a vehicle for 90 days, six months, a year.” (29:18 – 30:59 Clark)
  • Alternative: Take over someone else’s car lease with a short remaining term through a lease transfer service.
  • Pro Tip: Search for ‘car subscription services’ or ‘car short term leases’ in your area.

To Lease or Not to Lease?

• Listener: Dan in South Carolina, age 65, can pay cash but wonders if leasing is smarter due to high car prices.
• Clark’s Advice:
  "[You] need to think through, Dan, how long do you keep a vehicle? … You’re going to pay ... more money with a lease unless the manufacturer is offering a special factory subsidized lease ... If you buy a vehicle and you like to drive it for seven, eight, ten or more years ... just pay cash and buy one if you have the resources." (32:10 Clark)

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Notable Quotes & Moments

• “I'm part of the problem. I'm like saying, yeah, please shove that money into that Roth IRA because if things really fell apart for some reason in your life, you could still get ... the money ... no tax, no penalty.” (03:18 Clark)
• “Don’t do it. ... Your 401k ... look what the compounding effect is over time and it grows tax free.” (07:38 Clark)
• “We’re all Clark-washed. You made us do Android.” (12:18 Co-Host)
• “A number of adult kind of words that were thrown at me, all involving the word cheap.” (14:59 Clark)
• “Women feel that they are treated disrespectfully at a lot of car dealerships ... the business has been going through slow motion change for 30 years. I never thought it would take this long.” (18:45 Clark)
• “The best deals go to the savviest shoppers.” (25:39 Clark)
• Krista: “Last time [I bought a car from a dealer] was in my 20s and I cried in there.” (26:10 Krista)

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Key Timestamps

• 01:13: Record highs in 401(k) withdrawals
• 04:32: The hidden dangers of treating your 401(k) like a piggy bank
• 07:38: Clark’s advice: Don’t use 401(k) loans to pay down your mortgage
• 09:39: Pros and cons of digital wallets—Clark recommends Apple Pay/Google Pay over “Pays Wallet”
• 12:22: Clark’s strategy for online payments: Use virtual/one-time-use card numbers
• 18:42: The evolution of car buying, from Tesla to Amazon, Costco, and Carvana
• 25:36: How to get the real price and avoid dealer “junk fees”
• 26:10: Krista’s traumatizing car dealer story
• 29:18: Sixt car subscription and other short-term car solutions for elderly parents
• 32:10: Leasing versus buying in retirement—Clark’s framework

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Tone & Style

Clark maintains his hallmark calm, practical, and consumer-first tone, frequently highlighting simple solutions for real-life money dilemmas. The episode is conversational, light, and seasoned with playful banter among Team Clark, punctuated with Clark’s trademark frugality. Serious advisories are offered with compassion, clarity, and a touch of self-deprecating humor.

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Conclusion

This episode epitomizes Clark Howard’s approach: blending practical, values-based consumer advice with up-to-the-minute insights on changing financial tools and markets. He demystifies complex choices around retirement savings and car buying, urging listeners to act thoughtfully, use available tools, and always, always read the fine print. Whether it’s protecting your future by rethinking a 401(k) loan or outsmarting outdated car dealership games, the message is the same—empowerment comes from informed, rational action.

Transcript

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[Clark Howard]

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[Clark Howard]

New friends.

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[Clark Howard]

Dream Team.

[AT&T/Schwab Advertiser]

The new habitats.

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[Clark Howard]

You can watch the record breaking phenomenon at home.

[AT&T/Schwab Advertiser]

You're clearly working at Zootopia 2.

[Clark Howard]

Now available on Disney. Rated PG. It's my pleasure to welcome you to the Clark Howard Show. You know, our mission is to serve you with advice and information that empowers you so you're able to make better financial decisions in your life today. Let's face it, a lot of Americans really are squeezed financially. And we might make decisions today that we'll later regret. One of the hard ones is how many people are taking withdrawals from their 401k plans. Taking loans, taking hardship withdrawals, whatever. Recent stat from one financial house said the withdrawals were at a record high last year. I want to talk about what that actually costs you down the road. And later, buying a car, man, it's no fun. But that has created a huge opportunity for of all people, Amazon. Yeah, go on Amazon. Buy a pack of socks. Buy a new car. Actually, that is possible now from five different brands. I'll tell you about that later. So 401k withdrawals. First. Congress passed a law that greatly expanded the options where you're allowed to do a withdrawal from your 401k. The time Congress did that, I was not happy. All right, so here's the dilemma in behavioral economics. You have to think about how people are motivated to make decisions. And so if I am given a choice to put money in a 401k where I work, and they tell me, no matter what, you can't touch that till age. Depending on the employer plan, age, 55 or 59 and a half, no matter what, you can't touch it. There's a belief that a lot of people would say, I can't take that chance. I can't cut my paycheck now and know that, let's say I'm 28 years old and you're telling me I won't be able to touch it for potentially as long as 31 years. So the theory is that people would, even though it's a great thing to do, the 401k or a Roth IRA, that people won't do it if they know they can never touch the money. So think about how I talk about Roth iras. I say, well, you know, you put the money in and if you had to have it, you can pull out your contributions, but not your earnings. Tax and penalty free. I'm part of the problem. I'm like saying, yeah, please shove that money into that Roth ira because if things really fell apart for some reason in your life, you could still get a lot of the money without a tax penalty back out. No tax, no penalty. Same idea with the 401k, except now it's become so easy to withdraw money from a 401k that people are treating it as a mad money account and the consequences are ugly. And so we have a tool we've [e-mail] that if you're on the bubble and you're thinking about pulling money out of your 401k, doing a loan from your 401k, we'll show you what the long term consequences are to what your life will look like later when you hit retirement age because you took that money out. It's really hard. Let's say you're 35 years old and you've been putting money in a 401k. You've been great about doing it from when you first got a job out of high school or college. And now you hit a financial bump in the road and you're like, thank goodness I have this 401k money. And you take that loan from the plan. Before you take that loan, try our calculator. And you may say, you know what, I got another way I can get this done. I don't need that 401k loan. And the choice is yours. And again, the reason why there are these escape valves is to get you to contribute in the first place. And that's why I speak a fork tongue. Is that the expression?

[Clark Howard Show Co-host]

I think so, yeah.

[Clark Howard]

I say, you know, you can put money in the Roth IRA and if you had to have it, you can get blah, blah, blah. And then at the same time I say, but don't do it.

[Clark Howard Show Co-host]

Right? All right, let's go to some questions. This one Came from Lucas in Oklahoma. Hi Clark. Last spring I purchased my first home and I'm obsessed with putting extra money towards the principal of the loan. The rates when I got the mortgage were high and I locked in at six and a half percent for a 30 year loan. I put 20% down and still owe about 150. The loan was originally 170,000. My question is, would you advise taking out a loan from my 401k which my employer allows to pay down the principal Even more? The 401k loan has an interest rate of 6¼ percent, but all the interest goes back to my account. I can take a loan up to $30,000 with terms from 3 to 58 months. I'm only 25 years old and I contribute 11% to my Roth and to my 401.

[Clark Howard]

Congratulations to you.

[Clark Howard Show Co-host]

Yes, I know it's w usually not a good idea to take money out of your retirement accounts, but would this make sense? I just hate seeing 80% of mortgage payments go straight to interest. To the man from Roth, thank you for all you do. You've certainly empowered me into making better financial decisions in my life. Go Falcons.

[Clark Howard]

Hope springs eternal for my Falcons. Thank you.

[Clark Howard Show Co-host]

From Oklahoma. Go Falcons. Thanks, Lucas.

[Clark Howard]

Because that's a betrayal. Because in Oklahoma, the football team that most people in Oklahoma cheer for is either the Kansas City Chiefs or the Dallas Cowboys. But of late, it's the Kansas City Chiefs. Why? Because they've got so many recent super bowl rings, something the Falcons have never.

[Clark Howard Show Co-host]

It's been elusive.

[Clark Howard]

Yes, it has. Okay, so the answer is don't do it. Yes, you're right. You look at your mortgage payment and you see how much is going to interest. Let's flip that around. Your 401k, look at it and look what the compounding effect is over time and it grows tax free. If you're in the Roth version of the 401k, it grows tax free. And when you spend it later, it is tax free. So your mortgage 6.5%, the loan 6.75% from the 401k and you probably have loan setup charges with that loan. Just keep doing what you're doing, keep saving like you're saving and an opportunity will come along, sadly in the next recession where you'll have an opportunity to refinance that mortgage into a better deal.

[Clark Howard Show Co-host]

Mark in California says, I received an email inviting me to activate my Pays wallet, now available through my city Costco card. I've read your comments that you weren't a big fan of this service. I currently don't have or use the digital wallet service and I haven't found a need for them. Is there any, any convenient reason to use Pays Wallet? Is it safe?

[Clark Howard]

So first of all, just because the the Citigroup Citibank is is trying to solicit you to have a Pays Wallet with your Citibank Visa at Costco doesn't mean you can use it at Costco in that while you may not be able to use the Pays Wallet there. So what's going on is you've got Apple Wallet, Apple Pay, Google Pay, you've got Samsung Pay, and my Samsung Watch tries to get me to set up Samsung Pay and Pay for things on it. And there's something Garmin's doing, they're trying to get me to do. And so everybody's trying to get a share of your wallet activity and transactions. If you're going to do a wallet and you're an iPhone person, do Apple Pay. If you're on an Android, do Google Pay. Google Wallet because it's a more secure way to pay than the actual plastic. Why add another one like Pays when you've never added either of those? I don't know why you'd want a Pays Wallet anyway. I've not seen any compelling reason to have it.

[Clark Howard Show Co-host]

Amethyst in Pennsylvania says I created an account on a website that fills prescriptions. Basically, I won't say the name to place an order. No issues received in my prescription, but after I received it, I wanted to log in and delete my credit card information in case the site gets compromised. I don't like my credit card information on file at any website. There's no option to remove my credit card information, only to add another card. Some people on a message board said they added a fake card number and then we're able to remove their actual card. We shouldn't have to go through hoops for this though. I just want to delete my account and have them delete my information. I got on their chat and support team and letting them know that I wanted my information deleted and my account deactivated. This is their unhelpful and absurd response. I understand you'd like to deactivate your account and have your information removed. I can confirm that all your subscriptions have already been canceled, so you won't be billed again unless you contact us to restart it. Your account is inactive now. As for your payment info, it's stored securely in our system and can't be manually removed. But since everything is canceled, there won't be any further charges. Clark, how do I get this account deactivated at this point it's alive and

[Clark Howard]

you cannot kill it. I mean this is a terrible problem. And that's why I love one time use credit card numbers. So it's very easy if you are in the Google orbit for you to have it generate for your cards a one time use only number. When a site requires that you register a card number with them, you use a one time use only number.

[Clark Howard Show Co-host]

It's called virtual card number in Google.

[Clark Howard]

And does Apple have.

[Clark Howard Show Co-host]

Yes, I'm sure they do with Apple pay. I would think if you have it on your Apple browser.

[Clark Howard]

Wow.

[Clark Howard Show Co-host]

We're not enough Apple people in this room.

[Clark Howard]

I'm sorry, we're just. I know know that. What is it? Three hours of our viewers and listeners or iPhone.

[Clark Howard Show Co-host]

Yep.

[Clark Howard]

And we're all.

[Clark Howard Show Co-host]

We're Clark washed. You made us do Android.

[Clark Howard]

Okay. So using one time user virtual numbers is how you alleviate this problem. So when I shop online at an online merchant that I don't normally use, I always give them a virtual number because that way if I never go to shop there again, I don't have to worry that if they get hacked that that number is now a problem that's going to be stolen and be used for all different kinds of charges. I don't want. So you've done everything you can do at this point. Just know that your best solution moving forward because always easier to prevent a problem than to try to solve one is to use virtual or one time use only numbers moving forward at any website. And I should mention that Wayne had a card that expired on a streaming service and I said, does anybody actually watch it? She said, yes, it's got all these shows we watch.

[Clark Howard Show Co-host]

I'm sure she didn't say it that way. I'm sure she's very pleasant and you know.

[Clark Howard]

No, she was exasperated with me.

[Clark Howard Show Co-host]

That's understandable.

[Clark Howard]

I'm always trying.

[Clark Howard Show Co-host]

You're all over them because.

[Clark Howard]

Because I keep eliminating streaming services and they'll go to watch something and it's not. We don't have a subscription anymore because I'll look at the bill, I'll see one and I just immediately go and cancel it.

[Clark Howard Show Co-host]

And they're like halfway through a show and you don't understand.

[Clark Howard]

Yeah, I don't understand. No, but anyway, so she said can you. It says the payment forms expired. Can you put in a new one? So I go there and I put in a virtual number and somehow their system knew that it was a one time use only number and rejected it. I don't know how that I wonder what kind of electronic transmission they would have gotten that they knew.

[Clark Howard Show Co-host]

Well, probably just rejects it, I would think.

[Clark Howard]

Yeah, what a disappointment.

[Clark Howard Show Co-host]

Can I tell a Clark story real quick before we go to break? I remember your siblings. You all were. This is back when you were all working together to care for your mom and and it wasn't easy. This is pre zoom Google Meet or anything like that. You set up a conference call for all of you to get together to talk about. I mean it was a really stressful, important time and you set up some free conference call service and you guys were in the middle of this discussion and it was like you have 30 seconds before your free call will be disconnected. And what did your sibling say was

[Clark Howard]

as it disconnected a number of adult kind of words that were thrown at me, all involving the word cheap. And for me it was so routine I said, okay, we have to hang up now. I'll call you all back.

[Clark Howard Show Co-host]

I just have to listen to some ads first.

[Clark Howard]

It's a true story, but I do want to say, I've always repeated my Dad's phrase that one parent can take care of 10 children, but 10 children can't take care of one parent. The four of us as siblings did a great job, each of us taking on different responsibilities as my mom had dementia as she declined. We did a great job as kids up to her death in 2016 taking on different responsibilities so it can work. And it worked better because it was on a free conference call service. Coming up next, an update on being able to buy your next new car on Amazon.

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[Clark Howard]

The car business is slowly, surely but slowly coming into a new era. And people generally hate the process of buying a new vehicle. Women more than men. Women feel that they are treated disrespectfully at a lot of car dealerships when they're going to buy a vehicle. And the business has been going through slow motion change for 30 years. I never thought it would take this long. Part of the change is coming about because of the electric vehicle manufacturers who sell their vehicles direct to the public and there's no games, no gimmicks and it would shock you. But when you buy a Tesla, you go on tesla.com you build the car you want online, it tells you the price. You pay a $250 non refundable deposit and then they notify you when the vehicle is ready. You fill out some forms online and you go to pick it up at a Tesla center and the whole process at the center. If the center's cooking right on that day is under five minutes from when you walk in the door till you take possession of your vehicle and drive away. No games, no gimmicks, nothing. And more and more of the electric vehicle companies are doing the model like Tesla does. Carvana, Same kind of idea. And Carvana, after a near death experience a couple years ago, is now doing exceedingly well, exceptionally well, because people like the simplicity and the straightforward nature of buying. At first just used cars, and now Carvana in certain parts of the country is selling new cars the same way. Limited brands, but new cars. Well, Amazon, always looking for new businesses to get into, now has Amazon Auto. And I talked about it when it was essentially not even a beta, it was almost an alpha. And so if you go to Amazon, if you're an Amazon prime member, you go to Amazon.com in the search box, put in Amazon Auto and it will take you to it. And you'll see, depending on where you live in the country, they're only in 130 markets right now, so not, not nationwide. And their cooperative efforts vary by brand. What's available in a market Amazon is in, but when I first talked about it, they were only with Hyundai and only a few markets, but that's been spreading widely. And now their corporate sibling, Kia is in it. Mazda, Subaru, Chevrolet and Jeep. Now, as best I can tell, Chevy and Jeep are just testing the waters, dipping their toes in it. And in some of the biggest markets in the country, Amazon went to those first. And so what happens when you go to Amazon Auto is if you're looking to buy a new vehicle and it's a brand that's one of the participating brands and you want a particular model, like let's say you want a, a Hyundai Santa Fe. Hyundai. So you put in Hyundai Santa Fe and then it'll show you what's available in your area. You can then select color and version of the Santa Fe, you know which, which trim level. And if it comes in a hybrid, you can select hybrid. If it doesn't, you can just see gas engine, I don't know Santa Fe is made, but anyway, you see prices and dealers there and it's not quite as clean as what I talked about with Tesla and other electric vehicle makers. Not quite as clean as Carvana. Amazon's still feeling its way, but it's a lot cleaner than the normal thing, the grind where they try to wear you down and they put this fee on and that fee on and you're looking over here and they're doing something over there. It makes the Process much cleaner. Not clean, but cleaner. They're not automated the same way. Costco's car buying program is making Costco pretty much the largest seller of vehicles in the United States. Costco Auto is a program where Costco and it's very analog, where the Amazon thing, the Tesla thing, Carvana, they're really all digital. But under the Costco Auto program, you decide you want a particular brand, whatever it is, and you validate you're a Costco member. And then they will tell you who the Costco dealer is in that area. And any vehicle that dealer is selling, they have to have a no game kind of process with a stated price up front, with no gimmicks. And dealers mess with people through the Costco Auto program at their great peril. Because if Costco hears that people are being mistreated, they'll kick that dealer out. Because let me tell you, Costco's customer base is one of the most affluent in the United States of any retailer. And dealers want access because most new vehicle buyers are generally at the wealthier end of U.S. households. And so it ties in perfectly with Costco's membership base. Any of these ways are things you should be thinking about when you go to buy a vehicle. But let's say you want a brand that Amazon's not doing, or you don't like the dealer that Costco has in your area or you're willing to travel a wider geographic zone, which I always recommend. If you want to save money buying new wheels, you today can make a deal online with the dealer and execute everything online. Pretty much you sign the papers online and no games, no gimmicks, you know what you're paying with prices. And anytime you're getting a price from anywhere you say some parts of the country they call it drive out, others you just say, does that include all junk fees and taxes? I want an itemized list of all junk fees and taxes so that there's nothing that you get there later. They say, oh well, we got this $1,299 breathing fee or this idiotic doc fee that dealers have made up. That's just what's known as ADM in the business. Additional dealer markup. It means nothing, it's just a made up fee. So when you get a price you want to make sure that it includes all the made up Feees, all the ADMs they may have. And so the price is the price, whatever the marketplace will allow. But the best deals go to the savviest shoppers.

[Clark Howard Show Co-host]

Krista, Okay, I have A feeling.

[Clark Howard]

Could you see buying a car from Amazon?

[Clark Howard Show Co-host]

Yes.

[Clark Howard]

You would do that?

[Clark Howard Show Co-host]

I bought my last car online. I love it. I never want to go into a dealership. Nothing against car dealers, but I just don't like the whole process.

[Clark Howard]

Not your thing?

[Clark Howard Show Co-host]

No. Last time was I think in my 20s and I cried in there. Shirley in Alabama says, I'm interested, I'm interested in purchasing an electric vehicle. I like the Teslas, but I don't know what model or year to buy. My budget is $15,000. Any advice would be greatly appreciated.

[Clark Howard]

Well, Shirley, I'm going to disappoint you about the Teslas because if you were to look at even the lowest end model of Tesla, which is the Model 3 and you look to buy one used, the cheapest ones, the ones that are going to be in the teens are going to have ultra high miles on them. They're going to have maybe 80 to 100,000 or more miles, likely on the odometer. So I don't know that if you want to buy electric that Tesla would necessarily be what you want to buy. What I do want you to do though is electric vehicles that are going to be used in the teens are going to be a little bit older, but not necessarily a lot of miles. And the reliability of the battery pack, the range of the battery pack may not be sufficient for you. So I want you to go look at the Consumer Reports reviews of used electric vehicles and the ones they say avoid, avoid. No matter how good a deal they are. You're going to have to pay Consumer Reports for access to that you buy a year, I think the new subscriber for like 15 bucks or you can get it access at the library digitally, potentially for free at your local library. Take time reading through. As an alternative to Tesla, we were talking about Hyundai is just a minute ago. Hyundai has been pretty innovative with electric vehicles. They're dialing back now right now in the US because the push towards hybrids in the US instead of electric for new vehicle manufacturers. But they have a lot of, a lot of used vehicles running around out there that are going to be cheaper to buy used than an equivalent Tesla model.

[Clark Howard Show Co-host]

All right. And Jasper in California says Clark, my 80 something year old mother wants and needs to drive for approximately one more year as she transitions from living alone to a retirement community. Her current vehicle is a 2007 Mazda which has had several minor issues in the last year. So she's rather freaked out that it's going to break down on her any day now. I'd like to get her into something worry free for this final period with any needed maintenance and repair included. Seeing as it's too short to buy and most leases are for a minimum of three years, we're wondering if you have any other suggestions. I found you can get a short lease from a specialized company or a long rental from someone like budget, but they all seem quite expensive per month. Do you have any other solutions I haven't thought of? Rideshare probably won't work for her due to frequency of trips and technophobia.

[Clark Howard]

Okay, so for Californians and scattered other spots around the country, there's something I've talked about in the past and that's that the European car rental company Sixt, which is S I X T, has a subscription model where you subscribe to transportation per month. It's almost like signing up for a streaming service, but you're signing up for a vehicle and when she's done with it, your mom can just turn it back in. The cost all in is about I think it's about 700amonth. And gosh, the average vehicle new vehicle payment now is higher than that. Look at the sixth program because I've found that their subscriptions work best for people who are needing a vehicle for 90 days six months a year. That even though it sounds like a lot per month for having access to a vehicle that you can just wash your hands of it at pretty much any time. I think it's the best deal going now. There are some local groups experimenting with subscription services trying to enter this market and I don't know where in California your mom is and if there are any locals out there. So what you do is you do a search with whatever search engine you use for car subscription services or car short term leases. And there is one other way to do this that gosh, has a lot of. It's a barbell effect that people either really seem to love or really seem to hate. But there are services where somebody's in a lease and they want out and they play a match game. Let's say you find somebody with 10 months left on a lease or one year left on a lease and you pay a service to this company, the finder's fee that finds the lease for you. You have to qualify with the leasing company to take over the lease. But then that's another way you benefit somebody who's in a lease they need out of and you in turn have an ultra short lease that might fit your mom's needs.

[Clark Howard Show Co-host]

Dan in South Carolina says I'm puzzled about Auto leases. Speaking of leases, I've never leased a car before. I'm 65 and can afford to pay cash, finance or lease. With cars costing 50 plus thousand dollars these days, I'm not sure it makes sense to part with that much of my investable cash. Maybe leasing could be a better option. Mileage is not an because we're retired. What's your thought on this?

[Clark Howard]

Okay, the thing you need to think through, Dan, how long do you keep a vehicle? If you like to keep a vehicle, a really short time, not like the one year we were just talking about, but three years is a common lease term and you love having new wheels. You're going to pay for that lease more money than you would if you just bought something. Unless the manufacturer to move vehicles is offering a special factory subsidized lease. And you'll see these in ads from the manufacturer, not from the local dealer, either online or if you watch traditional television, you see ads, you'll see ads for special lease deals from the manufacturer. And these work well. Let me go back to the preamble. If you like to own a vehicle for a very limited period of time, and that case would be three or four years. But if you buy a vehicle and you like to drive it for seven, eight, ten or more years, let's even say five or more years, just pay cash and buy one if you have the resources to buy it, keep it simple and just buy what you want. And leases can be crazy complicated. So it's not just the price per month, not just what you have to pay up front, not what you have to pay as disposal fee, but you've got to look at all the terms and conditions of that lease. And in your case, if you're not driving a lot of miles, a lease may be really rotten for you because you're paying for miles you might never use. Thank you so much for joining us today. I hope we had some empowerment for you that takes you to what we're all about, which is empowering you with knowledge so you can save more, spend less and avoid getting ripped off. And coming up Friday, you get to hear me get empowered on our weekly Clark Stink segment. You get to hear how I failed to serve you well. And I love it. I love it. I learned so much from you about answers I gave that were lame, incomplete, or in your opinion, maybe just plain wrong. So tune in on Friday as we all learn together.