As for financing for new, we started with the idea of buying used (~2 or 3 years with less than 100K), but the price of used and the higher rate of financing, it was cheaper to buy new with a lower rate from the manufacturer. Was also able to use one of the recycle programs [HTML_REMOVED] employee pricing programs.
How can a new truck be cheaper to buy than a used 2 year old one?
Ha Ha! Made you look.
How can a new truck be cheaper to buy than a used 2 year old one?
Let's say you have 20K saved up for a new car. If you buy a used 20k car, that's done.
If you can get 0% financing, then you can look at what that 20K could be earning. Let's say you have a mortgage at 3%, that 20K would reduce your interest expense on the mortgage by 600/year (math isn't quite right, am using simple math, not compound). So now a new 26K car is the same as a used 20K car (600/yr * 10 years).
Numbers change as you change rates of return on both sides of that equation.
Let's say you have 20K saved up for a new car. If you buy a used 20k car, that's done.
you dont buy a used car for 20k, you buy one for 2k then spend 18k on it over 10 years, and then you sell it for 20k.
If you can manage to scrape together savings of $50k, and 0% auto loans are available then …
1) Pay $10k down payment.
2) Put $40k into solid dividend-bearing investments. Diversify - 4 investments of $10k each. You can easily hit a 6% return on these investments.
3) $40k at 6% is $2400 in dividends per year = $200 per month. You can finance for 60 months at 0% so that's $2400 x 5 = $12,000. Add to the $10k down and you'll be able to get something that costs $22k.
4) At the end of 60 months you have a car (depreciated over 5 years) and still have $40k in the investment account (assuming no appreciation of the stock's valuation) earning $200 per month.
5) profit.
When one person suffers from a delusion, it is called insanity.
When many people suffer from a delusion, it is called religion.
They also don't offer employee pricing on used cars.
They don't offer vehicle recycling incentives on used cars.
The finance rate on a used car is MUCH higher than a new car.
When we were looking there seemed to be a shortage of a couple year old vehicles with less than 100K of the model we were looking for, so prices were higher.
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