07-11-2016, 08:27 PM | #1 |
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"Cash" Purchasing Question
Hello. Circumstances have placed me in a unique (to me) position in which I have the funds in hand to buy an M2. I've always financed my cars, so I've never really contemplated this situation. So I've been wondering if this would give me any leverage in negotiations? I do not intend to pay more than MSRP, so if this does give me some influence I'm hoping that I could at least eliminate any markups. Or maybe even get me under MSRP. Does anyone have any experience with this?
-Also, would the high demand, low supply eliminate any leverage? Last edited by Lo0mis; 07-11-2016 at 08:35 PM.. |
07-11-2016, 08:40 PM | #2 | |
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07-11-2016, 09:08 PM | #4 | |
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But, for example, if you're in Ontario Canada like I am, the BMWFS rate for ///M products is 4.99%...that's the best they will offer regardless of how good your credit rating is. Much better to pay cash if you can |
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07-11-2016, 10:06 PM | #5 |
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Either way they end up with the cash whether it comes from a bank loan or straight out of your bank account. The only way they would care is if you were financing through them in which case they would make more money. You would think cash could at least save you some paperwork time but even when you pay cash they make you meet with the "finance guy" to do the paperwork.
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07-12-2016, 09:27 AM | #11 |
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Great, that answers my primary question, thanks everyone!
So now I have a follow-on: why would I opt for financing when I could just be done with it and not need to deal with a monthly payment? I'd also be saving money in the long run by not paying interest. Not that much, but still needs to be mentioned. It would also avoid touching my credit, which isn't that big of a deal, but at least it would be one less hard inquiry. I'm not grasping why having low rates available would entice me to finance, when buying outright is essentially a rate of zero. The only reason why I could imagine that getting into a loan would be advantageous would be that I would be holding the money over the next (however many) years, with the potential opportunity to gain some form of growth from it. I'm not an investment banker, but I don't think that this "small" amount of money would be able to net me any worthwhile return. Can someone please illuminate me further? |
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07-12-2016, 09:38 AM | #13 | |
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07-12-2016, 09:40 AM | #14 |
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07-12-2016, 11:56 AM | #15 | |
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07-12-2016, 01:12 PM | #16 | |
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07-12-2016, 01:29 PM | #17 | |
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If you finance 30k you're paying about $1600 in interest over the life of the loan at 2% rate (doable through any credit union). Put the remaining 30k in an index fund at 5% and you're making $1500 per year. |
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07-12-2016, 02:57 PM | #18 | |
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And yes, if you choose an index fund, you will get 5% over time easily. Even if the market tanks tomorrow and your 30k goes to 15k over night, it will rebound in 5 years and be worth exactly as much as it should have been and potentially more as the economy gets stronger. Take a look at your 401k and look at the dip in 2008 compared to 5 years later. That dip could have easily wiped out half of your value in the short term but in the long term, your money is worth more. If you don't know what index fund to invest in, give Vanguard a call and talk to someone. Pick one they recommend with the lowest fees and don't touch it again until 2021. |
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07-12-2016, 09:09 PM | #19 |
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^Agree with this. Personally, I would put down whatever amount got me the lowest financing rate (should be under 2%) and invest the rest. It sounds like your current financial position is uncommon, so in going to assume it might not always be this good. If that's the case, should your personal financial circumstances change you have immediate cash liquidity and you can get out of the car, if need be, at your own pace; and as others have said you should be able to generate more investment income than you pay in interest.
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07-12-2016, 09:21 PM | #20 |
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Thanks for all the suggestions everyone! I'm starting to like the idea of putting half down and investing the balance. I'll get with a financial adviser about the specifics.
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07-12-2016, 09:23 PM | #21 |
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07-12-2016, 09:49 PM | #22 | |
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