From Scott Mains: “About a year ago my wife and I purchased a new car using a similar tactic to Joe. [As described recently in Joe Beats the Bank, Joe financed his car because it’s an option on which the dealer makes money. He then paid off the loan in full the next month. – A.T.] We went him one better though. When we purchased our vehicle we charged the down payment to our credit card, which pays a flat 1% back, and then of course paid it off in full when the bill came in. By getting the 1% back on the down payment, it offset the interest we had to pay for borrowing the balance of the money for one month. This also gave us an extra couple of weeks to sell the stock we had earmarked to pay for the car.”
I once got into quite a row with a car dealer over the size of my down payment. I wanted to make it at least $5,000, to get the frequent flier miles. He forced me down to $1,000. The rest, an hour or two later when they delivered the car, I paid for with a check.
From Rock Hopper (which I’m guessing may not be his real name): “Before you write an article about cheap ways to get cars via the Internet, do some research, especially on Auto-By-Tel. I have had poor service, as have friends. The sales pitch is awesome, the delivery is customer specific. I have heard both sides of the coin.
“For example, when I submitted my request, I was called back by a dealer, with a price, but for a car with the wrong options?!?! I thought the purpose was to get the car you want. Please just ask around, I think you will find other horror stories. [As horror goes, I’d call this particular example pretty tame. – A.T.]
“When looking for a new car, showing a dealer a printout of your http://www.edmunds.com dealer pricing info can save you a lot of time. If the dealer wants to play that game, they will. If they get rude, go somewhere else. Showing them that you have the info upfront is a lot easier than spending the day with them, then getting to the pricing, and totally annoying the dealer by showing him you’re not a total dolt.
“As for the extended warranty, I, for one, am sold on them. Unfortunately, the 94 Ford Taurus that we bought with 25K miles has had $3K worth of repairs over the 2.5 years that we have owned it. We still have 30K miles left on the warranty that we paid $1K for. You might say that I should buy a more reliable car? One would think that the best-selling automobile would be reliable. In general, it has been, but the (nearly constant) little things add up to big bucks, and the warranty has worked out well for us.”
From Mike Gavaghan:“Obtaining a car loan when we have sufficient stock savings is certainly the same as buying stocks on margin. Indeed, I’ve always planned on borrowing against my stocks, rather than selling them, when the time comes to buy another vehicle. Wouldn’t this give me a low interest used car loan with tax deductible interest? There are, of course, additional risks whenever an investor carries a margin balance. But, based on your article, I’m worried that there is something more fundamental that I’ve overlooked.”
Nope, Mike. You’ve nailed it. You’re not overlooking a thing.
Quote of the Day
The people who sustain the worst losses are usually the ones who overreach. And it's not necessary: steady, moderate gains will get you where you want to go.~John Train
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