[nfwb11]

Thinking about financing a 435i through BMW at 2.99% in order to take advantage of loyalty cash, buildout cash (heard this is coming), and any other incentives they may offer. Once I've got $1K+ in credits, then I'd pay off the balance of the car with my first payment as I understand there's no penalty for doing so.

Please correct me if I'm wrong... and whether there are tax implications I'm not taking into account.

Thx

[DesertSmokeBBQ]

Makes sense and after 30 days, you can pay it off w/no penalty but if you can do that, why not put the bulk of the money into an interest bearing account, make the payment and pocket the difference between interest paid & interest earned...

[Mobster1983]

Originally Posted by DesertSmokeBBQ

Makes sense and after 30 days, you can pay it off w/no penalty but if you can do that, why not put the bulk of the money into an interest bearing account, make the payment and pocket the difference between interest paid & interest earned...

This is what I do. My loan is only 2.00% interest and I am making around 15% annually on my investments. I can even get a 5-year CD at 2.75% and put that money to better use while only paying the monthly payment.

My fiancée though wants me to pay off the car. I just can't get her to understand that I am making more money by investing that 60k than I would save from not paying loan interest.

[glangford]

It depends on where you are in the life cycle as well. I'm nearing retirement and for me it's all about debt reduction. House was paid off last year, and I didn't want a car payment. I pay normal bills, stuff money into my 401k at the max and that's it.

[Stoofpilot]

How are you making 15%. I want some of that!

[tdizzle]

Originally Posted by Stoofpilot

How are you making 15%. I want some of that!

+1!

It's not outrageous to hit that during a small period, but consistently? Gimmie!

[JasonX4MComp]

Originally Posted by nfwb11

Thinking about financing a 435i through BMW at 2.99% in order to take advantage of loyalty cash, buildout cash (heard this is coming), and any other incentives they may offer. Once I've got $1K+ in credits, then I'd pay off the balance of the car with my first payment as I understand there's no penalty for doing so.

Please correct me if I'm wrong... and whether there are tax implications I'm not taking into account.

Thx

I highly doubt they are going to put any buildout cash on the 4 Series as they were just released and are selling very well

[AppStoreMoney]

Originally Posted by tdizzle

+1!

It's not outrageous to hit that during a small period, but consistently? Gimmie!

I know several people that bought TSLA stock (Tesla) at $30-$40, which ended up gaining 400%+. But yeah, the key is to be able to do that consistently.

[iwinit]

Originally Posted by Mobster1983

This is what I do. My loan is only 2.00% interest and I am making around 15% annually on my investments. I can even get a 5-year CD at 2.75% and put that money to better use while only paying the monthly payment.

My fiancée though wants me to pay off the car. I just can't get her to understand that I am making more money by investing that 60k than I would save from not paying loan interest.

Keep it in mind that your investment income is taxable while your car loan interest payment is not tax deductible. If I had a 2.99% car loan, I would need at least 5% investment return to break even. Not to mention that all investments come with risks. I would rather pay off the 2.9% car loan than investing the money in stocks.

[Cyberdemon]

Originally Posted by Mobster1983

This is what I do. My loan is only 2.00% interest and I am making around 15% annually on my investments. I can even get a 5-year CD at 2.75% and put that money to better use while only paying the monthly payment.

My fiancée though wants me to pay off the car. I just can't get her to understand that I am making more money by investing that 60k than I would save from not paying loan interest.

Ironically I had this exact same mentality when I bought my last car in late 2007. Take my pile of cash, keep it invested and earn a better ROI then my 5% loan.

Then the 2008 recession happened and everything shit the bed, so in hind sight it probably wasn't the best decision.

If you think you can earn 15% for 5 years (not all of us are investment bankers and bought TSLA @ $30) then go for it, but it's not without serious risk. Just ask those of us who bought Facebook.

Frankly I would either accept the car payment as is, and just be happy having cash on hand, or if you have enough cash to feel comfortable with where you are in life, just pay it off.

If you manage to pull 15% a year then that's your call.

[glangford]

If you shop around you can also do better than a 2.99% loan. I ended up ditching the 2.99 offer and getting 2.39 locally. Don't discuss financing until after there is an agreement on price.

[puma1552]

I wouldn't want to part with $60k cash, but I wouldn't want to finance $60k either.

Why not put down $30k and finance $30k? Then you have more than enough down to never be upside down on the car, a very small and easy payment to handle, and still a nice chunk of cash left in the bank?

[Mobster1983]

Originally Posted by tdizzle

+1!

It's not outrageous to hit that during a small period, but consistently? Gimmie!

I do my own investing and have done pretty well over the last five years. I started after the crash and happened to do my initial investments the week before the stock market hit the absolute bottom. Returns from those initial investments were over 400% over the next few years. Since then when buying and selling I have been able to make consistent 15-25% gains (minus a couple bank stocks that I took a small hit on) and occasionally over 100%. Last week I took some profits on about half my portfolio for a total of ~33% gains. Don't like where this government shut-down and debt limit is going so decided to minimize my risks.

As others have said, yes, it is tricky and it is a risk. A very valid point about taxes as well requiring a higher percentage of gains. But it is worth it to me.

[tdizzle]

Originally Posted by glangford

If you shop around you can also do better than a 2.99% loan. I ended up ditching the 2.99 offer and getting 2.39 locally. Don't discuss financing until after there is an agreement on price.

My credit union is currently offering 1.49% for a 3 year loan. So you should be able to do better than 2.99%, especially if you opt for 36 months over 60+.

[F32]

Originally Posted by Mobster1983

I do my own investing and have done pretty well over the last five years. I started after the crash and happened to do my initial investments the week before the stock market hit the absolute bottom. Returns from those initial investments were over 400% over the next few years. Since then when buying and selling I have been able to make consistent 15-25% gains (minus a couple bank stocks that I took a small hit on) and occasionally over 100%. Last week I took some profits on about half my portfolio for a total of ~33% gains. Don't like where this government shut-down and debt limit is going so decided to minimize my risks.

As others have said, yes, it is tricky and it is a risk. A very valid point about taxes as well requiring a higher percentage of gains. But it is worth it to me.

Buying and selling individual stocks is not "investing." It's speculation. 93% of people who buy individual stocks end up losing money, and over 98% can't beat the S&P on an annualized basis over any time-horizon.

But what do I know...I'm forced to do it for a living rather than a hobby.

[becker800]

Originally Posted by Jason335iMsport

I highly doubt they are going to put any buildout cash on the 4 Series as they were just released and are selling very well

Yeah I was wondering the same thing.
Im about to purchase my 435i but where is this information on buildout cash coming?

I doubt this as well

[Cyberdemon]

Originally Posted by Mobster1983

I do my own investing and have done pretty well over the last five years. I started after the crash and happened to do my initial investments the week before the stock market hit the absolute bottom. Returns from those initial investments were over 400% over the next few years. Since then when buying and selling I have been able to make consistent 15-25% gains (minus a couple bank stocks that I took a small hit on) and occasionally over 100%. Last week I took some profits on about half my portfolio for a total of ~33% gains. Don't like where this government shut-down and debt limit is going so decided to minimize my risks.

As others have said, yes, it is tricky and it is a risk. A very valid point about taxes as well requiring a higher percentage of gains. But it is worth it to me.

That's also a good case of luck.

If you started 6 months before the crash you'd probably still be picking up the pieces of your losses.

As other people mentioned, 2.99% isn't great - my credit union is doing 1.74% right now, but you need to see what incentives the dealer will actually give you if it's worth financing through BMW or your own bank.

[DesertSmokeBBQ]

Originally Posted by Mobster1983

This is what I do. My loan is only 2.00% interest and I am making around 15% annually on my investments. I can even get a 5-year CD at 2.75% and put that money to better use while only paying the monthly payment.

My fiance though wants me to pay off the car. I just can't get her to understand that I am making more money by investing that 60k than I would save from not paying loan interest.

Equate it to how much additional shopping she'll be able to do with the difference....

[nfwb11]

Lots of great info so far. Thx.

1. One of the dealers I talk to in the LA area seemed to think that buildout cash would come at some point in the next 2 months, which is how long I'd be waiting before I actually took delivery of the car anyway. It wasn't a guarantee, and it didn't come off as a "sales comment", he just mentioned it was a possibility he thought would happen based on previous models.

2. Yes. Better financing from other banks, credit unions, etc. but outside financing shuts you out of the loyalty cash and any other incentives. It's only $500 (now) but every dollar counts.

3. The outside investment works in a perfect world, but as mentioned, investments are risky and no bank is paying anything close to legitimate enough interest to make this worthwhile. The difference is negligible at best IMO.

4. Luckily.... ever so luckily, I am in position to buy outright and prefer to drop a chunk from my stash (which may as well be stored under my mattress) rather than dropping an $800 check every month for the next 5 years.

Looks like I'm going the financing route with the intention of paying off quickly... within the first year I guess. Just want to determine if I hose myself on taxes in any way by going that route.

[tturedraider]

Originally Posted by nfwb11

Thinking about financing a 435i through BMW at 2.99% in order to take advantage of loyalty cash, buildout cash (heard this is coming), and any other incentives they may offer. Once I've got $1K+ in credits, then I'd pay off the balance of the car with my first payment as I understand there's no penalty for doing so.

Please correct me if I'm wrong... and whether there are tax implications I'm not taking into account.

Thx

If you payoff your loan before four payments have been made the BMWFS incentives you received will be charged back to your dealer by BMWFS. The dealer will take the hit, not you, but you will not be popular there. If you were to have any problems where you need the dealer to go to bat for you you could find yourself with an uncooperative dealer. The recommendation is to wait until after the fourth payment is made to payoff the loan so the dealer doesn't get screwed.

[rayg]

Originally Posted by tdizzle

+1!

It's not outrageous to hit that during a small period, but consistently? Gimmie!

15% is a load of crap, the best investors in the world can't manage those kind of returns over the long haul, let alone some random annuity.

[izzyM2]

Buying a new car is already a loosing proposition.