Michael West Financials · Conversation guide
Before you sign for a car.
A car loan is almost always sold by the month — a number small enough to feel fine. This sheet is for talking it through together before the ink dries, or for helping after it has. Run the math first; have the conversation second.
1 · Run the multiplication
The salesperson talks in months. The number that matters is the total over the life of the loan — fill it in.
2 · The 20/3/8 check
The Money Guy Show's 20/3/8 rule is the cleanest pre-buy check there is. Tick each box that passes. When all three pass, a car stays out of the way of everything else.
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Put at least 20% down.
A real down payment keeps you from owing more than the car is worth the day you drive it off the lot.
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Finance for no more than 3 years.
A 72-month loan makes the monthly look small by stretching the interest out for years. Three years is the ceiling.
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Keep the payment at or below 8% of gross monthly income.
That's pay before taxes. Above 8%, the car is quietly eating money the rest of the plan needs.
If a box won't tick, the rule isn't a moral judgment — it's a flag that this car is more than the budget can carry.
3 · If the ink's already dry: three doors still open
A signed loan is a sunk cost — the past isn't up for debate. But three concrete moves change where it goes from here, and at least one is almost always worth doing.
- Refinance. A credit union can often beat a dealer's rate after a few on-time payments. The lowest-friction move, and usually available.
- Pay extra against the balance. Early payments are mostly interest, so anything extra against the principal early shrinks the total a lot.
- Sell. If the payment is genuinely stretching, a private sale at full market beats waiting for the loan to bury you — even if you write a check for the gap.
4 · Talk it through
- What did the "cost of borrowing" number from box 1 turn out to be? Was it bigger than expected?
- Which of the three 20/3/8 checks passed — and which didn't?
- If a door above fits, who makes the call to the credit union, and by when?
- What would "a car that fits the budget" look like next time?
5 · What to say
Math doesn't change minds — relationships do. When the moment is right, these three sentences open the door without knocking it down.
How are you feeling about that monthly? I've heard some people refinance through a credit union after a few months — sometimes the rate drops a lot.
If you ever want a hand running the numbers — what the loan actually costs at a high rate versus a low one — I'm happy to. No pressure.
Whatever you decide, I'm in your corner.
6 · What not to do
- Lecture, calculate at them, or hand over a spreadsheet.
- Say "you should have" — if it's signed, that ship sailed.
- Bring it up the first time you see the car.
- Compare it unfavorably to your own car.
Lead with the relationship; offer the math only when they want it. Based on the friend-with-a-car-loan lesson.