Recently, Hyundai has begun airing car ads for their “Dollars and Sense” campaign, in which they’re offering a “cash back” promotion on new purchased Hyundais. To get across the idea that buying a brand new Hyundai is a financially sound decision, the commercials feature various personal finance and investment writers offering suggestions on how to use that “cash back” in a financially sound way. Here’s my favorite of the series, featuring an almost-creepy appearance by Larry Winget, the author of You’re Broke Because You Want To Be (which I reviewed and reasonably liked a while back):
Let’s look at the ads a bit more carefully.
Is this a good deal?
First of all, never, ever make your car buying decisions based on an ad for a new car. If you’re going to invest your money in buying a car, focus on late model used ones and use Consumer Reports and other car journals to research and find the most reliable and fuel-efficient car for your needs – and do the same if you must buy new for some reason. A late model used car with high reliability numbers and good gas mileage is the single best deal out there for car buyers.
Car commercials, for the most part, try to sell you on things that largely don’t matter – small sales up front (like 5% off), exterior appearance, and so on. Don’t base your automotive purchases on them – instead, go do some real research.
Is their advice any good?
Winget, Smith, and Lucia do provide good advice in the commercials. It does make sense to put your money in a highly diversified index fund or to pay off high-interest credit card debt – both are indeed good moves.
The problem with the commercial isn’t the use of the money – it’s the source of the money. They’re talking about using money that’s coming to you in the form of a rebate on an item that’s overpriced to begin with. You’ll lose more in depreciation of the value of the car the minute you drive it off the lot than you’ll gain back in the rebate from the sale.
In other words, their advice is great if we’re talking about $3,000 free and clear, but that cash is tied up in the value of the car you just bought – and you’ll lose more than that the second you drive it off the lot. A better option is to buy a cheaper car and then use the $3,000 you actually did save to pay off credit card debts and such.
Are these writers “selling out”?
The advice actually coming out of their mouths is good advice – the problem is in the context of all of it. By appearing in the ad, they do appear to be implicitly approving of the purchase (which isn’t a good financial choice for most people).
Given my condemnation of the ads, you’d likely expect me to say that these writers are “selling out,” or betraying the trust that their readers have placed in them. For the most part, I don’t feel that way, because if one of those writers had said no to the advertisement, Hyundai would have simply found another writer. By saying yes, they at least get their paycheck and a bit more attention to their books and public persona.
So, obviously, in the context of a car commercial, these guys are more interested in selling themselves to you than in providing an overall positive financial image. But by doing this ad, Larry Winget might just have been able to get a few more people to read You’re Broke Because You Want To Be, which does contain some excellent “tough love” style advice. If that book helps one of those new readers turn their life around, that’s overall a good thing, is it not?
Would I appear in such an ad if the opportunity presented itself? Honestly, I think it would depend on the car. For instance, if I were asked to appear in an ad for a car I would ordinarily recommend – one with good gas mileage, high safety ratings, and high reliability, I’d probably be fine with it because the people interested in such a car likely have some financial sense anyway. Alternately, I wouldn’t appear in an ad for a Hummer – but then the average Hummer buyer isn’t exactly going to be swayed by a guy writing a site called The Simple Dollar.
As a final note, since this post mentions Hyundai, I have to include one of my favorite comedy clips of all time – Stephen Colbert’s “I’m Singin’ in Korean” music video.