Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
Hi all. I figure I'd check in with the financially savvy folks of BP to see what is the best way to purchase a car. I'm not looking for a brand new car but a good used one that's maybe two to three years old?
I know there are some methods out there in terms of taking over someone's payments? And I know there's some websites that cater to this. Is that financially prudent for someone whose looking to buy and has the cash to pay off a car? I'm looking to do something that might save me the most money yet allow me to end up with a free and clear car. Or maybe a minimum amount in payments but I could knock out in a year or two. Anyone with any advice?
Not sure why anyone here would say cash. A car loan can run as low as 0% and each and everyone of us who actively invest is turning 15-30% returns on our cash. It makes 0 sense to dump money that could make you significant returns into a car that makes you nothing. Get a good rate and use your money to make more money. .
Not sure why anyone here would say cash. A car loan can run as low as 0% and each and everyone of us who actively invest is turning 15-30% returns on our cash. It makes 0 sense to dump money that could make you significant returns into a car that makes you nothing. Get a good rate and use your money to make more money. .
Thanks Pat and Joseph. Just to clarify, I will definitely be buying with cash. Just wanted to know if there was some method out there that allowed me to get the most for my cash. I.e. taking over someone's payments and then paying the car off or something like that. I haven't purchased a car in about 8 years so I am a little out of the loop on this.
Take you 501 C 3 tax exempt non-profit have the seller (dealer) donate an amount, say half of the vehicle and pay the difference with a higher price so the dealer gets basically the same benefit. Drive your corp vehicle. As the executive director, accept the vehicle as compensation (as a pay benefit), buy it over time from the corp. at it's depreciated rate including the value of the benefit of driving it, at it's salvage book value. Then the dealer has good will of supporting the non-profit, they can put that in an ad (which also promotes the corp.) The dealer could come out ahead too by working your numbers. Welcome to the world of non-profits.
Consider leasing through your company, buy the vehicle at the end of the lease term. Your lease is expensed, so you pay the amount less your tax rate.
If you're in RE might consider a truck! A paint and caulk hauler if nothing else to justify it in the company.
Take you 501 C 3 tax exempt non-profit have the seller (dealer) donate an amount, say half of the vehicle and pay the difference with a higher price so the dealer gets basically the same benefit. Drive your corp vehicle. As the executive director, accept the vehicle as compensation (as a pay benefit), buy it over time from the corp. at it's depreciated rate including the value of the benefit of driving it, at it's salvage book value. Then the dealer has good will of supporting the non-profit, they can put that in an ad (which also promotes the corp.) The dealer could come out ahead too by working your numbers. Welcome to the world of non-profits.
Consider leasing through your company, buy the vehicle at the end of the lease term. Your lease is expensed, so you pay the amount less your tax rate.
If you're in RE might consider a truck! A paint and caulk hauler if nothing else to justify it in the company.
Another point. Go look at vehicles, do your homework as to what you want and need. Don't get in a hurry or let the bug bite. Get Auto Trade or similar magazine open to ads and place a wanted to buy ad from an individual, non-dealer. Newspaper too.
Buying a car 2 or 3 years old you'll find owners who are considering trades as they are looking too. You can pay more than trade in but less than off the lot prices. Buying from the owner and getting it checked out will be your best bet.
The scam of the dealer is offering more on one side and charging more on the other, rarely will they really be in it for more than wholesale from an auction.
You might also get with a dealer and just agree to pay a flat fee to them as an auction buyer. You can go to auctions with a dealer, they will know how to get you in. Look at what there is, run it, if you bite, put a bid on it. Here, we have additional auction requirements, one buyer in there per dealer (attempt to cut this type thing out) just require the dealer to show the bill of sale before you buy and pay the fee, otherwise you buyer could get even more. :)
Not only should you pay cash, but you should strongly consider buying used.
Additionally, you will usually get a better price purchasing from an individual rather than a dealer {just vet the individual to make certain they are not a curbsider}.
I've never purchased a new vehicle - all mine of been 1.5-3 years in age and lightly used ... if you are not in a hurry, you can find a good deal.
My best car deals were from people I or my wife knew who needed to sell a car. These were cars people who got trade in prices from dealers and were complaining about the price offered. That's were I or my wife step in and tell them that we "need" a car and we'd be willing to buy it at that price, most would rather sell it at that price to someone they know than give it to a dealer at such a low price. There are people who will never sell a car to anyone they know to avoid static.
I got some nice vehicles on the cheap this way, 50 cents on the dollar. I could've made money turning around and selling them privately, but I keep vehicles a looooooong time to get more than my monies worth.
Unless you have bad credit, buying with cash is a personal preference, not a prudent investment decision, based solely on opportunity cost. I just purchased a three year old car with 6 yr loan, at 2.6%, and no additional financing fees. With this kind of financing available, I haven't heard a solid argument for using cash.
Unless you have bad credit, buying with cash is a personal preference, not a prudent investment decision, based solely on opportunity cost. I just purchased a three year old car with 6 yr loan, at 2.6%, and no additional financing fees. With this kind of financing available, I haven't heard a solid argument for using cash.
James,
You have a point, but purchasing with cash will typically give you far more favourable price; especially when purchasing from an individual. You can always go to your bank or credit union and draw financing in either case ... if it makes sense - a matter of doing a little math.
I agree it may have been true you can negotiate a cheaper price with cash in the past, but now you can get an approved check from the bank and negotiate as if you are paying cash. Due to this, I have not found any difference in price.
@Roy N.
I agree it may have been true you can negotiate a cheaper price with cash in the past, but now you can get an approved check from the bank and negotiate as if you are paying cash. Due to this, I have not found any difference in price.
James,
Here, unless you are drawing down a LoC, the banks are not going to provide financing for a motor vehicle before you have a negotiated contract ... so, you still need the initial cash to make the purchase.
The OP was looking for the most savvy way to purchase a motor vehicle, if you remove the constraint requiring purchase, there are even savvier ways to have access to a vehicle without the burden of ownership.
For many folks their vehicle passes much of its existence sitting idle and empty in their driveway or in a parking lot while they toil to pay for it (purchase and operating costs). If people took an analytical view of their vehicle(s) ownership, without the market-driven emotional entrapments which have been created here in NA, many would find that fractional ownership (i.e. a car share), or simply hiring a vehicle when required, could meet their needs at a fraction of the cost.
Used it to buy our new Odyssey in 2007 and saved about 5K. We buy new because we plan to keep our cars for 15 years at a minimum. Hubby's Acura is on year 11 and still going strong.
However I did promise him that if the RE "gig" becomes successful he can get his Audi S7 . . .
An alternative is something I heard while listening to one of the "Rich Dad" audiobooks; apparently, Robert purchases his vehicles by first purchasing assets whose cashflow will match or exceed the monthly payments of the vehicle. So, if you can purchase a property that provides a monthly cashflow in excess of an auto loan's monthly payment, it would be like getting the car for free.
At least, that's how I understood what was described.
Lampros Liontos ...I don't like purchasing new because of depreciation, but my last purchase decision was easier... One of the rentals makes the payment!!! I got all the bells and whistles... I shopped for the best deal!! Drove 1.5 hr to take delivery with my CU check...(3% rate)...saved 4K!!!...
Yeah, but real estate both depreciates (in improvement value) and appreciates (in land value). In this way, you have a property that increases in value and depreciates for the purpose of taxation.
Cars just depreciate.
As for buying a car for its resale value, I really don't get it... I only care about a car's utility value, not its resale value.
This is a super old thread but I am looking to get a new car as I have a 2007 BMW 335i (amazing car for the enthusiast but I can't justify the maintenance because it doesn't align with how I look at money now.) and I am strongly considering a new Kia Optima or the like
No one seems to have mentioned the fact that many manufacturers offer 0% APR for 60-75 months and offer pretty nice rebates as well. For example: the optimas I'm looking at have an MSRP of $23,000. They have a factory rebate of $2,500 (10.8% off)
And I recently helped a friend negotiate on the same model and I managed to get the selling price down $3,200 (13.9% off)
The way I figure it if I choose this car I can get a brand new vehicle for 24.7% off retail price. Literally get free money from Kia financial, and have a 10yr/100,000 mile drive train train warranty 5yr./60,000 bumper to bumper
Hard to argue that a 2-3 year old car is a better deal, not to mention it frees cash up for investing
This