Pod Insights The Clark Howard Podcast 11.14.24 Your Online Privacy / Good News For Car Buyers About this episode It’s important to protect your privacy online and there are some simple things you can do to stop the sharing of your data when visiting websites. Also, Clark shares news on the state of the auto industry, and what it means for car buyers. Protecting Online Privacy: Segment 1 Ask Clark: Segment 2 Auto Industry Update: Segment 3 Ask Clark: Segment 4 Mentioned on the show: Safe Browser Alternatives That Promise Not To Track You Want To Guard Your Privacy Online? Search the Web With DuckDuckGo 7 Things To Know Before You Use Zelle Safer Ways To Send Money When Should You File a Claim on Your Homeowners Insurance? 6 Things To Know and Do Before You Deal With a Home Insurance Claims Adjuster Should I Convert a Traditional IRA to a Roth IRA? - Clark.com How To Buy a Used Car - Clark.com Clark.com resources Episode transcripts Community. Clark.com Clark.com daily money newsletter Consumer Action Center Free Helpline: 636-492-5275 Learn more about your ad choices: megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices
Transcript 0:00 Speaker 00 They're running a cover two defense. But you're running to get game day deals on Uber Eats. Keep everyone at tonight's watch party fed with deals from your go to restaurants. Or stock up with deals on your favorite snacks and groceries. Whatever the occasion, get game day deals on Uber Eats all season long. It's not football without food. Uber Eats. Order now. Terms apply. Product availability varies by region. See app for details.
0:35 Speaker 01 It's great to have you here on the Clark Howard Show. You know, our mission is to serve you with advice and information that empowers you to make better financial decisions in your life. And in today's episode, I'm going to start with your online privacy. There are some simple things you can do to stop the sharing of your data when you visit websites. And also I have news for you on the auto industry you need to know. So I don't know if you've noticed when you go to a new website that you haven't been to in a while, or it's new to you, that the privacy choices you're being asked are different.
1:18 Speaker 01 And no matter where you live in the United States, it's all because of a law California passed that now a handful of other states have passed that give you the right to not have your privacy invaded, like the standard terms of service always had with various sites. Take the 15 seconds is all it's going to take to say no, no, no to all the sharing of your personal information that these sites want. That will eliminate a lot of your information going into the ether to be used in ways you're not going to want at some point. But there's something else you can do.
2:02 Speaker 01 And I've talked in the past about the Brave Browser. The Brave Browser is something that Like no one's heard of and has virtually no market share, which is a shame because the Brave Browser is all about your privacy. If you don't like everybody spying on you online, the Brave Browser does a great job of not sharing your data. And listen what it does. With any site you go to, they automatically do that manual work I was just talking about for you. And when the privacy thing's going to pop up, they say no, no, no, no for you automatically
2:47 Speaker 01 and protect your information. This is something that is a great tool for you because having your personal information out there everywhere with all these data breaches, do you want all that in who knows whose hands? You never know whose bad hands it's going to fall into. And somebody else had mentioned prior, the software you can download called Privacy Badger that does similar kinds of things that you can use with the traditional browser you may already be using that overlays and does kind of what the Brave Browser does.
3:30 Speaker 01 But I'd like for you to try Brave and be brave. Try something outside of your normal comfort zone. And if you find that it works for you as a browser, it's also going to do that work for you behind the curtain to protect your privacy, which you really want to do online. I want to again say I love what Apple does now on the iPhone with protecting your privacy with apps that you download. That the default setting on an iPhone is to protect your privacy.
4:10 Speaker 01 You know, Google with its Android, Android is all about libertarian free market kind of stuff and you know, I love that. And at the same time, I wish it was easy on an Android to do what iPhones do with apps, protecting your privacy so much better. Krista?
4:30 Speaker 02 Okay. This question came in from Paul in North Carolina. You want me to say the bank name?
4:36 Speaker 01 Oh, sure.
4:37 Speaker 02 Wells Fargo is getting pretty unfriendly with their new Zelle terms. Should Zelle be avoided at all costs? And I read through the terms. I don't know if you had a chance to glance like.
4:46 Speaker 01 Oh, I had already had somebody else say, what's going on here? This sounds really terrible.
4:51 Speaker 02 Yeah.
4:51 Speaker 01 So I've looked at the Wells Fargo thing and it didn't look different to me than how horrible Big Bad Zelle is with any issuer.
5:00 Speaker 02 Because they don't, you have to mediate now. Is that always the case?
5:03 Speaker 01 As best I know, that was always the case. Zelle is an abomination. It is a disaster for you. It is dangerous for you. And Zelle was a react from the banks that are terrified of non-bank actors stealing market share from them. And so Venmo, Cash App, PayPal have been such a source of fear for the banking industry. So a bunch of the big banks got together and they created this Frankenstein's monster called Zelle. And by the way, I keep hearing from people that my beloved credit unions are embedding
5:45 Speaker 01 Zelle and activating it without permission from their members. Hope that's not really true. But Zelle embeds in your checking account. And if a criminal is able to get into that, they are able to steal money through the Zelle platform that is unrecoverable. And the banks and credit unions, as I shared with you recently about a big credit union in Michigan are like, not our problem. I mean, you, you're the, you're the one who used Big Bad Zelle. I mean, why were you doing it? And so the problem is really simple.
6:30 Speaker 01 And it goes to the core of the problem of corruption in the capital. That the Congress has not done anything, anything to put in place protections for consumers that use these payment apps. You know, the regulations never anticipated and the laws never anticipated that there would be Big Bad Zelle or Venmo or Cash App. And it's the Wild West. And good for you that you read the terms. The best thing to do? Deactivate Zelle. Never use it. Somebody wants to pay you by Zelle. The answer is, thanks, but no.
7:14 Speaker 01 You gotta pay me another way. Because, you know, if the banks actually, actually cared about you, they would never have designed Zelle to be such a danger to your financial security. Period.
7:31 Speaker 02 Dale in Georgia says, "We had a leak from a damaged kitchen faucet, causing water damage primarily to the wood floor. The insurance company initially denied coverage, but the mitigation company thinks we should pursue it using a public adjuster. What are your thoughts on the pros or cons of using a public adjuster?"
7:48 Speaker 01 Okay, so I got a couple of things to say here first. I don't know how many thousands of dollars the damage is. And you haven't said in this what the insurance company adjusters justification was for denying a claim for a water leak. But I want to emphasize that you don't want to make a claim for damages that you in some way can afford to pay yourself. Because the insurance market for homeowners insurance is unstable right now. And any claim of any size could lead to cancellation, or as the insurance industry likes to call
8:32 Speaker 01 it, non-renewal of your insurance. And so I want you to think of homeowners insurance as being just for catastrophic events. And as a result... Unless you have a mortgage that requires that you have an ultra-low deductible, I want you also to raise your deductible and your homeowner's insurance. So you're not even, you're self-insured for the first so many thousand dollars that you're willing to be self-insured for. You've already made a claim, so you now have a claim on your record. So they call it a zero-dollar claim if they didn't pay anything, but it's still a claim sitting there. If you want to pursue it, and it's enough thousands that you think you should,
9:17 Speaker 01 hiring a public adjuster can be a good idea. And there's some, there's some minefields in hiring one. And I've got a simple guide at Clark.com, how to decide how to deal with the adjuster, and whether it is a good idea to hire a public adjuster, what circumstances that would make sense.
9:39 Speaker 02 Patrick in Massachusetts says, "I'm sure you've gone over this a bunch, but do you have any advice for people who have traditional 401K/IRA rather than a Roth? Should I just leave the traditional as-is rather than converting over and just point all new contributions to a Roth? And if I do convert, should I move it over in tranches? Any other considerations to keep in mind?"
10:00 Speaker 01 Okay, this is a great question. All right, and you, you said both 401K and IRA. If you've got a traditional 401K, the employer has to have a Roth set up and has to allow for you to move money from the traditional 401K to the Roth. In the case of an IRA, you can do that pretty much at will. And know that you're going to have to pay tax as if you earn money in the year that you do the conversion. And I've been seeing a lot of stories worried about with our nation's budget deficit and accumulated debt.
10:41 Speaker 01 That tax rates are likely to go up. You've heard me say that too. And encouraging people to do conversions from traditional to Roths of both 401ks and IRAs because of the likelihood that tax rates will be higher in the future. But you have to think about where are you going to come up with the money to pay that tax? If you have a good amount of money in traditional savings and you can afford to pay the tax on the conversion, that can be a good strategy. Or you can just do just what you said. Do Roth contributions moving forward in IRA, in 401k that you're only contributing to Roths
11:26 Speaker 01 instead of traditional. And then over the years, Patrick, the amount of money you have in traditional will become a lower and lower percent of the money you have saved for the future, even if you never do a conversion of dollars. So I'd say contributing to Roths moving forward is a higher priority usually than paying the tax to convert traditional to Roth. Who should be in Roth? I want to emphasize again, you make less than $200,000 as a single individual, less than $400,000 as a married couple. You want to be doing the Roth versions of retirement accounts, not traditional.
12:09 Speaker 01 And coming up ahead, the auto industry is at another inflection point. And it's because they got piggy. And I'm going to tell you how the auto industry getting piggy is going to be to your advantage in 25 when you're looking to buy a vehicle.
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14:15 Speaker 01 I just saw a stat the other day that took my breath away because I get excited about obscure economic data that shows that I am really a dull person. But the price spread between the average used car and the average new car being sold in the United States is the largest ever on record. I'm going to give round numbers. The average used car is pricing out at 27,000. When I say car, I mean SUV, truck, whatever. 27, the average new vehicle, 47,000. Now, this has led to real distortions in the market that we've got such a large gap right now.
14:58 Speaker 01 The used vehicle prices have been trending steadily down since the supply chain disruptions that distorted the new vehicle market. And there were no new vehicles on dealer lots for month after month after month to speak of led to used vehicle prices going way up. They've now come back down. Now that's led to a lot of people in used vehicles that they bought on a loan being upside down on those vehicles. And the people in distress on their loans is up. There's a lot of things that are left over from the marketplace disruptions from the supply chain shortages.
15:42 Speaker 01 So the automakers now are sitting with more and more and more vehicles on their lots. And a lot of them are well above what the industry and inventory considers to be ideal, which is either a 55 day supply of vehicles or a 60 day. I mean, there are a lot of vehicles now that are in over 100 day supply, meaning if they close the factory or shut it down temporarily is what you're supposed to say, and sold off what they had, not making another vehicle. If there's an 120 day supply, that means it'll take them four months just to work off the already produced inventory. And so the many, many brands, and especially
16:27 Speaker 01 specific models of brands are way overstocked. And the problem is, the manufacturers got used to the prices they were able to command during the supply chain shortages. And only now we're like, oops, oops, we don't have buyers at these prices when the price spread is so gigantic between the average used price and the average new price. So my prediction is that in 25, you're going to see the mix of vehicles for sale change. And on new dealer
17:07 Speaker 01 lots, you're going to see a lot more availability of lower price vehicles. And you're going to see steadily higher discounting from the dealer.
17:20 Speaker 01 And more incentives from the manufacturer to move this overhang of vehicles. So 25 in my prediction is going to be a very good year for the subset of the marketplace that can afford and prefers buying a new vehicle. Because it's, it's like this wily coyote thing. They kept doing what they were doing because it felt good. They were getting the profits. And now they're looking down and the, you know, they ran off the top of the mountain and they're looking down at the canyon and the marketplace will adjust and respond.
18:01 Speaker 01 So you can play hard to get pretty much on any brand except Toyota. Toyota remains in a situation where they are able to, the dealers are selling Toyota inventory in many cases before it even makes it from the factory to the lot. They've already sold that item of inventory and it is virtually unique as a Toyota thing with most other automakers sitting there with vehicles. They're begging for people to buy.
18:36 Speaker 02 All right, we'll go to questions and their car related. This one's from George in Pennsylvania. I visited a car lot to buy a used EV. I told the salesperson I did not want to do a credit check unless we agreed upon the trade in price of my current car. After negotiating, we agreed on a $4,000 trade in and shook hands. I unfroze my credit. The manager came by with the financing and the monthly payments were higher than I was expecting. Looking over the itemized financing, it included nearly $1,000 in wheel and tire warranty.
19:04 Speaker 01 Are you serious?
19:05 Speaker 02 Nearly $3,000 in an extended warranty. I told him I did not need these warranties. The manager came back with those numbers removed. When I looked at the itemized financing, I saw the trade in value for my car was reduced to $3,000. I asked about this and we've referred to the desking manager, whatever that is.
19:24 Speaker 01 The what? The what?
19:26 Speaker 02 They said that they.
19:27 Speaker 01 The desking manager? Okay, I've heard a lot of terms in the automobile market. I have never heard of a desking manager. That's, so Krista, who's our desk manager here?
19:41 Speaker 02 I don't know. We need to hire one.
19:43 Speaker 01 Who's taking care of this desk?
19:44 Speaker 02 We gotta hire one.
19:45 Speaker 01 Yeah.
19:46 Speaker 02 They said they changed the value of the trade-in because it simply did not work for us. I argued that we agreed on the price and I made it clear I did not agree to a hard inquiry on my credit if we did not agree on the trade-in. I was called a bully by a used car salesman. I left without buying a car. What do you suggest I do next? Am I stuck with a hard inquiry on my credit? Is there someone I should report this to, other than the BBB?
20:10 Speaker 01 Okay, so George, you were subject to what they call, in the lingo of the trade, the grind. The grind is where they repeatedly change the terms and conditions on you, try to wear you down, they want you to get hungry, I mean physically hungry, stretching the time out that you're at the dealership till you sign whatever it is they come up with. And they're like, "Oh, look over here, look over here, and you should be looking over there." And this is such a common story that I will tell you the good news. If you're in the market to buy a vehicle and you are allowed to have multiple inquiries
20:55 Speaker 01 for a loan for a vehicle in a short period of time, usually considered to be two weeks for a mortgage a month, and it's treated as a single inquiry because the credit scoring models realize you're not out trying to buy a fleet of vehicles, you're buying one, but you may be comparison shopping a loan from one place to another. So all those hard inquiries are treated as just one, as you would have anyway if you're applying for a loan for a vehicle. All right, so the most important thing in your story that I want to start with is you were trying to get your loan at the wrong place.
21:36 Speaker 01 Eighty-plus percent of people do this where they get a loan at the dealer. No, you do not get a vehicle loan at the dealer. At least you don't start there. You get pre-approved for a loan for, in your case, a used EV at your credit union. If you're not a member of a credit union yet, join one. Credit union auto loans are cheaper, consistently cheaper than they are from a bank. And they are way cheaper in interest rate and terms and conditions than they are when you originated at a dealer. If you have pre-approved for a loan from a credit union, or if you don't want to
22:17 Speaker 01 deal with a credit union, a higher cost loan from a bank, and at the dealer, they say, well, we'd really like to write your financing. Well, yeah, you can if you match this deal I have elsewhere. And that's a whole different thing than if you just put yourself at their mercy. That's number one. Number two, this junk that happens at dealers is why all the profit at a dealer is with the F and I department, finance and insurance, where you didn't ask for a $1,000 tire warranty or wheel warranty. You didn't ask for a $3,000 extended warranty. They just bury it in the paperwork, hope you won't notice, and cheat you. If you arrange your loan in advance, it's much harder for a dealer to slip in
23:02 Speaker 01 all these junk fees, known as PACs, where they're packing the profit on, and you did the right thing by leaving. There's no one to report them to. You did the most important thing. You've got everybody on our YouTube show and our podcast hearing and seeing how you have to be careful, because although there are a lot of dealers that play it clean and straight now, there's still the people doing business the old way, trying to cheat you.
23:33 Speaker 02 Also, there's lots of more important information about if you're buying a particularly used car, and we have a great article at Clark.com, and it's titled, "How to Buy a Used Car."
23:41 Speaker 01 And I'll add to that. The neat thing is, when you're looking for a used vehicle, and I mentioned this last month, EVs are the steal of a deal right now on used vehicle lots.
23:55 Speaker 02 Craig in New York says, "Clark, I agree with you to wait until the end to tell a dealer if you have a trade-in. But let's say you have an offer in hand from CarMax, Carvana, et cetera. If the dealer won't match the price, do you say to the dealer, 'Be right back. Got to go sell my car to Carvana quick so I have money for the down payment.' How do you handle that situation?"
24:12 Speaker 01 All right. So Craig, gosh, you just backed right into a repeat in part of the prior, which is, if you're looking for the down payment money for the vehicle...
24:27 Speaker 01 You were going to arrange your financing at that dealer. Again, go back to step zero, which is really step one. Arrange your financing in advance. You're not going to be in that situation with that dealer. You just say to them, okay, so what are you? What are you offering on a trade in? Well, I was offered this by CarMax, this at Carvana. Can you match this? And many times they'll say yes, sometimes they'll say no. You may not ever be able to pull that deal together at that dealer. If they're not able to get your trade in and you may have to start over somewhere else. But when you end up selling it to, let's say, Carvana or CarMax,
25:10 Speaker 01 or the dealer matches or comes close enough that you're willing to do it there. Then you've got your down payment, but you already have the most important keys to buying a vehicle. It's not the key itself. It's that financing arranged in advance.
25:26 Speaker 02 And then I don't think, I think in some states, I don't know how many states.
25:29 Speaker 01 You save sales tax.
25:30 Speaker 02 You save sales tax if you trade at the dealer. So you want to calculate that. Beverly in Georgia says, should I use my savings to buy a used car or finance through a bank? 5.2% interest loan for four years is what the bank's offering on $20,000.
25:44 Speaker 01 Okay, so interesting question, Beverly. Cash is not going to earn as much moving forward as it has in the recent past because inflation now is really close to back to trend, which is a long-term desired trend is in the twos. And inflation, even though we were beaten up by inflation for a good while, we're back to trend line. So interest rates we can earn are going to be less than the 5.2 of the loan. So Beverly, if you have a decent amount of savings. And you're not going to put your rainy day at risk by taking 20,000 from your savings
26:28 Speaker 01 and just paying cash for the vehicle? Pay cash for the vehicle. The only reason you would take out a loan is if it would put you in a bad situation. If you had an oops, your whatever needed fixing, or you needed medical or dental and you had a out of pocket you were going to have to pay and you didn't have the savings for it, then you would take out the loan. Otherwise, pay cash. Cash is king. So have an absolutely wonderful day. Tomorrow is my favorite podcast and YouTube show of the week.
27:07 Speaker 01 This Clark Stinks, where you help me become better at serving you. Because this is all about us together, learning from each other, to be empowered with knowledge that gives us the ability to save more, spend less, and avoid getting ripped off. And if you feel somebody is ripping you off, taking advantage of you, or you got something you're just having trouble figuring out the right thing to do, know that we offer one-on-one advice available to you for free, 30 hours each week. Go to Clark.com/CAC to see how to get that free advice from the Team Clark Consumer Action
27:52 Speaker 01 Center. And see you tomorrow.
27:59 Speaker 00 They're running a cover two defense. But you're running to get game day deals on Uber Eats. Keep everyone at tonight's watch party fed with deals from your go-to restaurants. Or stock up with deals on your favorite snacks and groceries. Whatever the occasion, get game day deals on Uber Eats all season long. It's not football without food. Uber Eats. Order now. Terms apply. Product availability varies by region. See app for details.
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