Speaker 1: Joining us right now is host of KFIS How to
Speaker 1: Money every Sunday at noon, and a guy I listened to.
Speaker 2: While I am prepping my Sunday afternoon.
Speaker 1: Program, Joel Larscar. Joel, always an honor to talk to
Speaker 1: my man. Thank you so much for glad, glad to
Speaker 1: be with you. Christ Yeah, man, thanks for carving time out.
Speaker 1: I appreciate that. Uh.
Speaker 2: Can we talk about the big story first?
Speaker 1: As we talk about our finances and how we're saving money,
Speaker 1: these auto tariffs are going to have, I say, a
Speaker 1: ripple effect that's going to hit not just the new
Speaker 1: car market, but also the the pre owned inventory is
Speaker 1: going to see a bumping price as well as demand
Speaker 1: for pre owned goes up. I think more people are
Speaker 1: going to hang onto their vehicles, which means fewer h
Speaker 1: fewer cars entering the pre owned market.
Speaker 2: So I think that's gonna happen.
Speaker 1: And some people are I think taking they're taking the
Speaker 1: wrong tact and they're thinking, oh, I better buy a
Speaker 1: car now before the price goes up.
Speaker 2: Yeah.
Speaker 3: No, you're you're spot on, and you're you're really what
Speaker 3: you're you're you're getting at here is the cascading impacts,
Speaker 3: like the second or effects of these tariffs. And so yeah,
Speaker 3: it's really easy to spot the first order impact, which
Speaker 3: is cars that get imported into the United States are
Speaker 3: going to be more expensive, in particular new cars, right,
Speaker 3: and so some models built one hundred percent in the
Speaker 3: United States, like Tesla's, we likely won't see any meaningful
Speaker 3: price increase, although once other cars start to go up
Speaker 3: in price, Tesla might say, hey, we can raise our
Speaker 3: prices too and garner a little more profit from this deal.
Speaker 3: But yeah, you're right, the second order effects of these
Speaker 3: tariffs are going to mean the cars across the board
Speaker 3: go up in price, and car parts in all likelihood
Speaker 3: will too.
Speaker 2: So I think it's really it's really.
Speaker 3: Important for people to not say, oh, these tariffs are
Speaker 3: coming in April. Third, I should buy a car by
Speaker 3: by the end of the month, a brand new car,
Speaker 3: spend tons of money, so I can save a few
Speaker 3: thousand bucks because yeah, estimates are some of these models
Speaker 3: are going to cost five, six, seven thousand dollars more
Speaker 3: once the tariffs are in place. But the other question, too, Chris,
Speaker 3: as always, is will these terraffs actually be implemented or
Speaker 3: is this more talk? And that's just another thing that
Speaker 3: consumers have to grapple with.
Speaker 2: Well, that is a really great point too. Is this
Speaker 2: all the negotiating factor that's going to go away here
Speaker 2: soon or not? Are we?
Speaker 1: I would It would stand a reason then if parts
Speaker 1: are going up, that the price of service on our
Speaker 1: vehicles is going to increase too. If you've got the
Speaker 1: you know, a broken actuating blinker, I don't know, then
Speaker 1: then you may see that that price jump up a
Speaker 1: little bit more too when you take it in to
Speaker 1: have your car repaired.
Speaker 3: Yeah, And it's interesting the length of car ownership has
Speaker 3: been growing in this country, which is something I like
Speaker 3: to see. Like, I'm all about owning and maintaining older vehicles,
Speaker 3: but I think when people you have to go in
Speaker 3: and see the mechanic and there are repairs that they
Speaker 3: have to do to their two thousand and nine Honda
Speaker 3: or something like that, and they see like I was
Speaker 3: literally just talking to a friend last night and he's like,
Speaker 3: I got to get this my old Suparu running, And
Speaker 3: I was like, what's it gonna cost?
Speaker 2: Like eight hundred bucks? He's like, no, like fifteen hundred bucks.
Speaker 3: And there's this there's this connect between what we think
Speaker 3: it should cost and what inflation's actually done to the
Speaker 3: real cost of repairing those cars. But I will say,
Speaker 3: when you think about paying that fifteen hundred bucks, it's
Speaker 3: emotionally difficult and it's financially difficult. But what's more financially
Speaker 3: difficult for most Americans is signing up for buying a
Speaker 3: new car. Signing up for that car payment that on
Speaker 3: average is now in the seven hundred and fifty dollars range.
Speaker 3: And even to get a payment that low. Lots of folks,
Speaker 3: you're talking about at least a six year long car loan.
Speaker 3: So that's Hey, that's two months of a car payment.
Speaker 3: When you think about it like that, I might want
Speaker 3: to keep the car that I've currently got on the road.
Speaker 3: Plus it's saving me money in other ways.
Speaker 2: I agree.
Speaker 1: Joel Larsgard, a host of KFI is How to Money
Speaker 1: every Sunday at noon on KFI. So, Joel, when the
Speaker 1: price of a new car goes up, and then subsequently
Speaker 1: the price of the ustar all the things that we
Speaker 1: just talked about, does that mean that the insurance companies
Speaker 1: are going to start charging us more too, because they
Speaker 1: obviously they've got more they'd have to cover.
Speaker 3: Oh, I mean for sure, yeah, when the price when
Speaker 3: the value of the car is higher, and then your
Speaker 3: car is damaged and the cost to repair that car.
Speaker 3: We've already seen it, even aside from tariffs, we've seen
Speaker 3: it with electric vehicles, and just when an electric vehicle
Speaker 3: is in an accident, let's say, the battery pack has
Speaker 3: to be replaced, we're seeing insurance rates on electric vehicles
Speaker 3: go up across the board because as the cost to
Speaker 3: repair that versus the cost to repair a traditional gas vehicle,
Speaker 3: where you know, the main engine, let's say, isn't typically
Speaker 3: impacted unless it's a really severe accident, but the engine
Speaker 3: of the EV is, so you're going to have to
Speaker 3: replace that battery, which is incredibly expensive. And then talking
Speaker 3: about car insurance, man, there's these fascinating stories coming out
Speaker 3: about vandalism to Tesla's, not just dealerships, but to people,
Speaker 3: individual owners of Tesla's, And there are a lot of
Speaker 3: predictions right now that we're going to see specifically Tesla
Speaker 3: owners targeted with insurance price hikes. Shouldn't even use the
Speaker 3: or targeted, because it's not like it's a nefarious thing
Speaker 3: trying to harm anybody who owns a Tesla. It's really
Speaker 3: just about. Hey, there's greater risk now because of some
Speaker 3: of the political violence happening towards against Tesla owners. Even
Speaker 3: people who like own Teslas, who say I don't really
Speaker 3: like what Elon Muskin is doing, they still might be
Speaker 3: at risk of having their car keyed or something like that,
Speaker 3: which could lead to an insurance claim. So yeah, I
Speaker 3: think the insurance companies it makes sense they might be
Speaker 3: raising those insurance rates on Tesla owners.
Speaker 1: Well, that sounds like no fun in other words, right
Speaker 1: telling me is everything's going to get more expensive?
Speaker 3: Yeah, you kind of didn't sign up for that. And
Speaker 3: I think, actually, interestingly enough, I think a lot of
Speaker 3: Trump voters didn't think they were signing up for this,
Speaker 3: and so it's going to be interesting again to see
Speaker 3: whether the tariffs come about or not. When you kind
Speaker 3: of look at the overall trends where consumer confidences and
Speaker 3: stuff like that, a lot of people are saying, oh,
Speaker 3: this isn't shaking out quite like I thought it was
Speaker 3: going to. And I thought I was voting for lower prices.
Speaker 3: I thought I was voting, you know, to see a
Speaker 3: president who is going to like boost the economy, and
Speaker 3: tariffs have the opposite effect. I mean, this is just
Speaker 3: a widely known economic reality that tariffs create higher prices
Speaker 3: for consumers. And I think there are maybe occasionally reasons
Speaker 3: geopolitically to impose a tariff.
Speaker 2: I'm not a political expert, but when you when you look.
Speaker 3: At like what comes down the pike and what's heading
Speaker 3: down the pike, what's what's coming our way? As you know,
Speaker 3: people who buy stuff in the United States of America,
Speaker 3: it's going to be it's going to be higher prices,
Speaker 3: and specifically on vehicles, and then there there are other
Speaker 3: cascading effects to those tariffs too.
Speaker 1: So yeah, Joel, why is it then that if it's
Speaker 1: widely accepted as a fact that tariffs drive up the
Speaker 1: cost of goods, why why is the White House so
Speaker 1: adamant that no, it's gonna have the opposite effect, It's.
Speaker 2: Going to be really great and everything is going to
Speaker 2: be better for us.
Speaker 1: It just feels like that flies in the face of
Speaker 1: what ninety five percent of experts say.
Speaker 3: Yeah, and then that's a that's a really good question.
Speaker 3: I don't know why they.
Speaker 2: Think there really.
Speaker 3: I think I think what the belief is is is that, hey,
Speaker 3: if we make it more expensive to buy these cars,
Speaker 3: that are made that are made in other countries. Then
Speaker 3: what's gonna happen is the US car industry is gonna boom,
Speaker 3: and we're gonna build more stuff here in the United
Speaker 3: States of America. And so it's kind of this belief
Speaker 3: that we are losers in terms of global trade. And
Speaker 3: then if we institute more tariffs, what's gonna happen is
Speaker 3: it's gonna We're gonna see job boom. We're going to
Speaker 3: see more factories open in the United States, We're going
Speaker 3: to produce more goods and services here in the country.
Speaker 3: And I think they might be right to a certain
Speaker 3: extent on the fringes, but I think the overall approach
Speaker 3: is completely incorrect and that we overall as Americas. We
Speaker 3: think about avocados from Mexico, Hey, guess what if we
Speaker 3: if we right, if we teariff the mess out of
Speaker 3: those avocados, it doesn't mean like the abundance of avocados
Speaker 3: that we currently have in this country.
Speaker 2: It's just it's gonna vanish like or we're gonna pay
Speaker 2: a lot more for them.
Speaker 3: And and yeah, maybe some US producers are able to
Speaker 3: see they're able to see greater profits, and maybe compete
Speaker 3: with those Mexican producers. But overall it's it's a lose
Speaker 3: lose for consumers, and it's going to raise prices, all right.
Speaker 2: Joel Larsgard, who loves his Mexico Joel.
Speaker 1: I happen to see that Congress is looking at capping
Speaker 1: the amount of interest that credit cards can charge me.
Speaker 1: And I believe there is already a cap, but it's
Speaker 1: it's something like thirty percent or somebody of that sort.
Speaker 1: But now there's proposals to cap credit card aprs at
Speaker 1: something like ten percent, which as a consumer, that sounds
Speaker 1: pretty good to me, but not everybody's on board.
Speaker 2: Well, it's interesting. It's kind of bipartisan.
Speaker 3: There there are people from both sides of the aisle
Speaker 3: that have proposed different caps on credit cards what they're
Speaker 3: able to charge consumers, Republicans and Democrats alike. And so
Speaker 3: this is one of those things where there's kind of
Speaker 3: a meeting of the minds and they're saying and it's interesting.
Speaker 3: There have been proposals over the years to say, oh,
Speaker 3: it's app credit card interestrates at eighteen percent.
Speaker 2: Actually, let's make it fifteen percent.
Speaker 3: And so these different bills have been floated and the
Speaker 3: latest kind of mind meld here is to say, let's
Speaker 3: cap credit card interest rates at ten percent. And it's
Speaker 3: funny that people in Washington tend to agree on this
Speaker 3: because I disagree wholeheartedly with this attempt, because it sounds
Speaker 3: so nice and it sounds so empathetic to say, hey,
Speaker 3: we know you've got credit card debt.
Speaker 2: It's a big pain.
Speaker 3: And credit card interest rates, as everyone knows, have gone
Speaker 3: up significantly. We're talking about average credit card interest rates
Speaker 3: nearing twenty two percent now for people. And if you've
Speaker 3: got significant credit card debt, that's one of those I mean,
Speaker 3: it could take you decades if you're paying the minimum
Speaker 3: every single month to pay that credit card off.
Speaker 2: And so I sympathize with that.
Speaker 3: But the problem is if you institute a ten percent
Speaker 3: rate cap, I think there are significantly worse things coming
Speaker 3: down the pike, like there is no free lunch, and
Speaker 3: why not five.
Speaker 2: Percent if we're going to do ten percent.
Speaker 3: When you start messing with what credit card companies are
Speaker 3: able to charge people in terms of interest rate, you
Speaker 3: might actually let some subprime borrowers. And in fact, CNBC
Speaker 3: said something like ninety five percent of subprime borrows wouldn't
Speaker 3: have access to credit cards anymore.
Speaker 2: So's they're basically.
Speaker 3: Barring a huge segment of the population, for me being
Speaker 3: using credit cards at all. If something like this goes through,
Speaker 3: and they might have to turn to even more nefarious
Speaker 3: kinds of debt. Talk about second order effects of something
Speaker 3: that sounds good on its surface but underneath could lead
Speaker 3: to even worse.
Speaker 2: Outcomes for a lot of people.
Speaker 1: So you're talking about things like a payday loans or
Speaker 1: something like that that could that's interesting.
Speaker 3: Yeah, I mean, I think a lot of people if
Speaker 3: the credit cards ripped out of their hands, and you know,
Speaker 3: we might say, oh, credit cards, it's not great that
Speaker 3: people pay twenty two percent interest. And that's something I
Speaker 3: talk about regularly on the shows, like, only use credit
Speaker 3: cards if you can pay them off on time and
Speaker 3: in full every single month. And if you, you know,
Speaker 3: use them and you feel like you can't do that
Speaker 3: and you need help. I try to talk about that too,
Speaker 3: where to go to get that help to pay off
Speaker 3: your credit card debt. But I just I don't like
Speaker 3: the potential downstream effects of having some sort of credit
Speaker 3: card rate cap because I just think it's going to
Speaker 3: lead to people turning to more nefarious places to get
Speaker 3: that money that they need.
Speaker 1: Am I mistaken that there are rate camps already though,
Speaker 1: something like thirty percent?
Speaker 2: Don't? I don't believe so.
Speaker 3: I think the only rate caps on credit cards that
Speaker 3: are that are in effect are for military service members.
Speaker 3: So I believe there's like a thirty six percent cap
Speaker 3: interest rate cap for people who served in the armed forces,
Speaker 3: But I don't think there's any interest rate cap for
Speaker 3: credit card companies in general. And you know, the other
Speaker 3: thing too, is there is competition. It might seem kind
Speaker 3: of weird to say, but there is competition in the
Speaker 3: credit card industry. And when you think about going one
Speaker 3: of the things that credit card credit cards from credit
Speaker 3: unions will tend to offer is significantly lower interest rates
Speaker 3: on credit cards or there are you know, ballots transfer
Speaker 3: offers that often allow you to pay zero interest for
Speaker 3: like fifteen or eighteen months, so it's not like you're always,
Speaker 3: let's say, you know, stuck forever it paying twenty one
Speaker 3: percent interest. Those interest rates they also move with what,
Speaker 3: you know, what the FED is doing, what the Fed's
Speaker 3: up to, and just interest rates in general, so you
Speaker 3: might want to I think it's people want to point
Speaker 3: the finger or politicians at least do at the credit
Speaker 3: card companies and make it seem like they're incredibly greedy.
Speaker 3: But a lot of people do really well under the
Speaker 3: credit card system. There are kind of the haves and
Speaker 3: the have nots. Some people earn a lot of rewards
Speaker 3: and they don't ever pay a dime, to be said,
Speaker 3: in MasterCard or the banks that issue those cards, and
Speaker 3: then other people man they lose out because they're not
Speaker 3: handling credit cards well. And so I want to talk
Speaker 3: about credit card hygiene less about changing the way the
Speaker 3: system is constructed, because I don't necessarily think it's out
Speaker 3: to get anybody.
Speaker 1: See this is why we listen to How to Money
Speaker 1: with Joel Laarer's card every Sunday at noon on kfive.
Speaker 1: So what's your take on the consumer confidence reports that
Speaker 1: came out and it says a twelve year low, so
Speaker 1: Americans are increasingly worried about the future of the US economy.
Speaker 3: Yeah, I mean, I think so much depends how you
Speaker 3: view the economy.
Speaker 2: For the most part.
Speaker 3: When you look even at some of the surveys of
Speaker 3: how consumers felt based on their political allegiance, it's amazing
Speaker 3: how it flip flopped the day that the right after
Speaker 3: the election or right after the inauguration. So I think
Speaker 3: sometimes people think about how the economy is doing through
Speaker 3: a really political lens, But then I think everyone right
Speaker 3: now is starting to feel the basically like the reaction
Speaker 3: to their own habits. I think we've gotten used to
Speaker 3: buy now, pay later in this country. It's something I
Speaker 3: rail against. It feels like it's everywhere you can now
Speaker 3: by now, pay later a burger on grub Hub, which is.
Speaker 2: Just utterly ridiculous. So I think it's partly habits.
Speaker 3: And then I think we're also we're kind of reading
Speaker 3: the writing on the wall with and some of the
Speaker 3: economic policy, and I think there's just a general sense
Speaker 3: of malaise in this country right now, even though I
Speaker 3: think there is a lot to be hopeful. That's got
Speaker 3: to be part of it.
Speaker 1: Yeah, did you ever think you'd see a day that
Speaker 1: you could take out a.
Speaker 2: Loan for a burrito? No?
Speaker 3: No, I didn't, And it kind of baffles me. But
Speaker 3: I think that the more we offer products like that,
Speaker 3: like credit cards, started it right and it was like, oh,
Speaker 3: you don't actually have to pay for the thing that
Speaker 3: you want right now, and we've taken that to the
Speaker 3: nth degree and it just sets people up for failure
Speaker 3: and you forget, you know, what you're buying. And like,
Speaker 3: we're paying so little attention to our financial futures because
Speaker 3: it's all about the present. And I just think that
Speaker 3: makes us unhappy. But it also it makes us poor too,
Speaker 3: which leads to more unhappiness.
Speaker 1: Right, Yeah, we're after that, Yeah, chasing that short term gratification. Joel.
Speaker 2: Love listening to you, man. Thank you so much for
Speaker 2: your insight and your wisdom on these things. Thank you,
Speaker 2: mich Yeah, thanks for Chris, appreciate it. Yeah, of course. Yeah.
Speaker 1: Joel Larsgard, host of kfis How to Money every Sunday
Speaker 1: at noon. Find him and follow him on the socials
Speaker 1: at How to Money Joel at How to Money Joel