MEET THE MONEY DEAN
Dr. Terence Pitre grew up in New Orleans as a first-generation college student, served in the U.S. Navy from enlisted sailor to commissioned officer, worked in corporate finance at Fortune 500 companies, earned a Ph.D. in Accounting from Michigan State, and now serves as dean of a business school. Along the way, he learned money lessons the hard way — the exam before the lesson. The Come Up is where he shares them: complete, practical financial guidance for people building wealth without inherited money or an inherited playbook. No hype, no shame, no surface-level advice.
Terence Pitre, Ph.D.
2-time Business School Dean, Ph.D. in Accounting, MBA, Finance & Accounting, Navy Veteran and former Corporate Accountant
Your Car Note is Quietly Killing Your Come Up
The dealer asked, "What payment are you looking for? That's the trap
“I drove the same car — a five-thousand-dollar Chevy Nova — for about ten years. All through undergrad, all through my MBA program, and my first three or four years working in corporate. When that car finally died, I bought a five-thousand-dollar Mazda, and I drove that one for about seven years.
Little did I know that was one of the best financial decisions I would ever make. Here's why.”
Nobody on the come up gets told this: the car conversation you have in your 20s and early 30s does more damage to your wealth than almost any other single decision — more than your daily coffee, more than eating out, more than most of the stuff finance influencers yell about. Not because cars are bad. Because of HOW we buy them.
Let's go deep. Grab a coffee. This one's worth 8 minutes.
Part 1: The payment is the dealer's number, not yours
Walk into any dealership, and the first question is some version of: "What monthly payment are you comfortable with?"
That question sounds helpful. It's actually the whole game. Here's why.
Once you answer "around $450," the dealer's job shifts from selling you a car to solving a math problem: how do we fit the most expensive car possible into $450 a month? And there's always a lever to pull:
Stretch the term. $30,000 at 7% over 60 months is $594/month. Same car over 84 months? $452/month. Congratulations, you "hit your number" — and you'll pay roughly $8,000 MORE in total interest, and you'll be underwater on the loan (owing more than the car is worth) for 4+ years.
Roll in your negative equity. Trading in a car you still owe money on? They'll happily add that leftover balance to the new loan. Now you're financing two cars and driving one.
Pad the back end. Extended warranties, paint protection, GAP insurance at triple the market rate — all of it disappears into "just $30 more a month."
The rule: Negotiate the out-the-door price. Total. Everything included. Get the OTD number in writing (email works — ask the internet sales manager, they'll send it). THEN talk financing. If the dealer won't separate the two conversations, that tells you everything.
The number that actually matters isn't the payment or even the price. It's the total cost of ownership over the years you'll keep the car:
Purchase price + interest + insurance + fuel + maintenance + repairs − what you sell it for = what the car actually cost you.
Two cars with the same $450 payment can differ by $15,000–$25,000 on that math. Keep reading.
Part 2: 3% down vs. 20% down (houses taught us wrong lessons for cars)
On a house, low down payments can make sense — the asset usually appreciates. A car is the opposite: it loses value the moment it leaves the lot, typically 20% in year one and roughly half its value by year five.
So when you put 3–5% down on a car:
You're underwater immediately. The loan balance is higher than the car's value from day one.
If the car gets totaled in year two, insurance pays market value — not your loan balance. You could owe thousands on a car that no longer exists. (This is the one legitimate use of GAP insurance — but buy it from your insurer or credit union for $20–60/year, not from the dealer for $800.)
You pay interest on the maximum possible balance for the maximum time.
Practical target: 20% down on a new car, 10% on a used car, and a loan term of 60 months or less. If you can't hit those numbers, the honest answer isn't a longer loan — it's a cheaper car. That stings. It's also how people actually come up.
One more rule of thumb worth stealing: total vehicle costs (payment + insurance + fuel) should stay under 15–20% of your take-home pay. Over that, the car is eating the money that should be becoming your down payment, your emergency fund, your Roth IRA.
Part 3: Lease vs. buy — the real math, not the vibes
Leasing gets trashed by finance people and oversold by dealers. Both are wrong. Here's how a lease actually works, because once you see the machinery, the decision gets easy.
A lease payment is built from three parts:
Depreciation. You pay the difference between the car's price (capitalized cost) and what the leasing company predicts it'll be worth at lease-end (the RESIDUAL VALUE). Lease a $40K car with a 60% residual over 36 months, and you're paying off $16K of depreciation.
Rent charge. The "money factor" — this is the interest, disguised. Multiply the money factor by 2,400 to get the equivalent APR. A money factor of 0.00300 = 7.2% interest. Dealers count on you not knowing this conversion. Now you do.
Taxes and fees.
When leasing genuinely makes sense:
You were going to trade in every 3 years anyway (then you're just pre-paying depreciation you'd eat regardless, often with lower payments)
The car has an unusually high residual (some brands subsidize residuals to move inventory — that's a discount hiding in the math)
You want an EV: the tax credit often applies to leases even when the purchase wouldn't qualify, and EV residuals are genuinely uncertain, so let the leasing company take that risk instead of you
You run a business with legitimate vehicle deductions
When leasing kills your come up:
You drive more than the 10–12K mile cap (overage runs $0.15–0.30/mile — a 5K overage per year is $2,250–4,500 at turn-in)
You keep leasing back to back. This is the real danger. A permanent lease cycle means a permanent car payment for life. The person who buys a reliable car and drives it for 10 years spends 5–7 of those years with NO payment — and that gap is where wealth gets built.
The math that settles it: Buy a $35K car, keep it 10 years, and your average cost of ownership runs roughly $450–550/month all-in. Lease a new $35K car every 3 years for those same 10 years, and you're at roughly $700–850/month all-in — forever. The difference, invested at 8%, is six figures over 20 years. That's not a typo. That's the come-up you traded for a new-car smell.
Part 4: The costs nobody puts on the window sticker
Insurance drops as the car ages — if you let it. Here's the move almost nobody makes: once a car is paid off and worth less than ~$6,000–8,000, run the math on dropping collision and comprehensive coverage. The lender required full coverage; once there's no lender, it's your call. If you're paying $800/year in collision/comprehensive premiums plus a $1,000 deductible to protect a $5,000 car, you're paying a lot to insure a little. Keep liability strong (never skimp there — that protects your assets), self-insure the metal. A 10-year-old paid-off sedan can cost $60–90/month to insure versus $180–250 for a financed new SUV. That difference alone funds a Roth IRA contribution.
Repair costs vary wildly by brand — and this is knowable in advance. Rough annual repair/maintenance averages from industry data (RepairPal, Consumer Reports):
Tier | Brands | Rough annual repair cost |
Cheapest to keep | Toyota, Lexus, Honda, Mazda, Kia, Hyundai | $400–500 |
Middle | Ford, Chevy, Subaru, Nissan | $500–650 |
Expensive | BMW, Mercedes, Audi, Volvo | $900–1,200 |
Wallet destroyers | Land Rover, Jaguar, Maserati | $1,200+ and climbing after warranty |
That used BMW at the same price as a new Camry isn't the same price. Over 8 years, the repair gap alone can run $5,000–8,000 — before the specialty parts, the dealer-only diagnostics, and the premium fuel.
Insurance also varies by model, not just driver. Two cars at the same price can differ by $600–1,200/year to insure. Sports trims, cars popular with thieves (ask a Hyundai/Kia owner about 2021–2023), and vehicles with expensive-to-repair sensor-packed bumpers all cost more. Get an insurance quote on the specific car BEFORE you buy it, not after. Five minutes on the phone; it belongs on your test-drive checklist.
The Come Up Playbook (save this part)
Never answer the payment question. Negotiate out-the-door price, in writing, before financing.
Get pre-approved at a credit union before you walk in. Let the dealer try to beat it.
20% down new / 10% down used, 60 months max. Can't hit it? Cheaper car.
Total car costs under 15–20% of take-home pay.
Buying and holding 8–10 years beats leasing for wealth-building, almost every time. Lease only if you understand the residual and money factor — and say the APR conversion out loud in the finance office. Watch their face.
Quote insurance on the exact model before buying.
Paid-off car worth under ~$7K? Run the numbers on dropping collision/comprehensive.
The cheapest car you'll ever own is usually the paid-off one in your driveway. The come-up isn't a nicer car. It's a bigger gap between what you make and what you owe.
Now, these are the rules we recommend. But life has a way of giving you the exam first and the lesson later. So understandably, you may not always be able to follow these rules verbatim. Sometimes you need a car in order to secure a job — in order to secure your future. In those situations, yes, you'll be bound by the amount of the car note, and there's not much you can do about it.
But long-term? Always keep these rules in mind.
Happy car hunting.
P.S. — If this helped you, forward it to one person on their come up. That's how this grows.
