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When I sold cars I worked with a guy who had been in the business 30+ years all over the country. He told the story of a known "shady character" who wanted to pay cash for a new car with cash he had made under the table. When he was informed that cash sales transactions over $10,000 had to be reported to the IRS, hed financed the car and paid the note off in cash right away.
So, yeah, it can be done, just make sure there's no pre-payment penalty as others have said.
Yeah with loans from a credit union coming in at 1.49% it can definitely make sense to pass up the 0% and take the incentive instead. Even with the cash on hand, that is better served in investments with rates this low.
Not necessarily. Investing in the stock market with borrowed money and pulling a payment out each month will result in depletion of the portfolio before the loan is paid a surprisingly high percentage of the time, due to sequence risk.
To further clarify, yes the rebate is tied to dealer financing. I am playing the dealers against each. I have it narrowed down to 2 dealers.
In my state, I have 3 days to cancel the loan, no fees or penalty.
I originally told the dealers I already have financing, but I'd be open to dealer financing if it lowered my bottom line. Then both mentioned an incentive that's worth $500. Then it got interesting b/c they started cutting other costs. One guy said if I did the dealer financing, not only would I get the rebate, but he'd give me an additional $200 off (so a total of $700 off), then they started offering me other stuff. I'd already negotiated pretty good deals to begin with (and I did my research) so these are great deals.
My point is that I though it would just qualify me for the dealer-financed rebate, but it is starting to snowball a little.
BTW, I've bought both new and used cars. The new car buying experience is about 100 times easier and far more pleasant. I am doing far more negotiating from my laptop (and having more success) over the new car than I ever did for used.
Also, the new cars are, in many cases, only costing a few thousand more than what I was willing to spend on a used. When I factor the difference over the time I plan to owe the vehicle it makes the new car a no-brainer.
I was also surprised about insurance costs. My new car is not going to be nearly as expensive to insure as I'd feared.
Depending on which state you live in, another thing to consider between new vs used is the tax. Obviously sales tax will be cheaper on a used car with a lower purchase price, but some states also have excise or personal property tax. In MA we get hit with a ~$800 excise tax the first year on a typical new car. It goes down every year after that, so buying a 3 or 4 year old used car could end up saving you a few extra grand on sales tax and excise tax. CT is even worse. I'm only saying this because I noticed you're on the East coast and many of the states here have taxes on personal vehicles. Whether or not the tax goes down every year like it does in MA, I do not know but I figure it couldn't hurt to mention it to you. This is one of the reasons why you see so many old cars on the road in MA and CT, for example.
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