bullseye

Any finance wizards out there...?

I'm considering purchasing a new (2001) Corvette. GM is offering 0% financing right now, and I can probably negotiate a good deal on a 2001, since the 2002's are already arriving at the dealerships. What kind of additional discount should I expect from the dealership if I pay cash instead of financing the purchase? (Local Memphis banks are offering new car loans at a 7.99% rate.)

Please advise. Thank you.

(I'm keeping my Maxima, but I'll probably just trade-in my Infiniti I30t.)

nismomaxse97

iTrader: (4)

The 0 percent is the way to go. Every payment you make will be 100 percent principle. Never pay interest if you do not have to.
Use their money and do not even think of going to a bank for any financing. You will end up paying for 150 percent or more of whatever price you and the dealer agree with. Here is a quick way to tell how much interest you might pay over x amount of years. It is called the rule of 72.
When you times the interest times the number of years and it = 72 this means your money has doubled or in this case the total payments on your VEtte.
So lets say you pay 8 percent for 9 years. If the price of the vette was 30000 you would end up paying 60000 after the loan. So if you cut the loan to 4.5 years you would have payed 45000. So 15000 is alot of money to save.

Go with the 0 percent interest and laugh all the way home, because GM is paying your interest.

Hope this helps

pmar

With zero down, zero percent interest, the Corvette is $1222 per month over a normal 36 month loan. Bump it up to 7.9% and the payment is $1377. Neither scenario is an incentive for me to buy. Put 50% down and the payment is still $611 per month at zero percent interest. I'd prefer to pay cash for the car and have all these numbers go down the drain.

First of all, the Corvette sells for list price. It is not worth list to me, regardless of attractive financing. Even the BMW's don't sell for list. Mercedes comes very close.

2nd, the 0% is limited term, limited people. It's not designed to move cars that sell at list. It's designed to move cars that wont move, and to "do the right thing" with respect to the economy spiraling downward. The thing is, under the current conditions, not a lot of people are plunking down money for luxury sports vehicles. It's the last thing on people's minds. I talked to a lot of people this week as I flew around the country, not everyone is ready to laugh yet.

farm boy

Even if you have the money to pay cash for it, I think you should still finance if you qualify for 0%. Take the money that you would have spent by paying cash and invest it(let your $ make $$$).

bullseye

Now THAT'S a good suggestion. If I can get better than a 7.99% return on my investments, I should pursue the 0% financing option, and laugh all the way to the bank. Not bad... Thank you.

farm boy

No problem. I sold cars as a summer job at Covington Pike Toyota in '91 and '92, and it always made more sense to finance if you can get an interest rate that was lower than 5-6%.

P.S. let me know if you ever go to the track. I live about 60 miles south of Memphis, and I've never been.

MaineI30

Sorry I just can't get past the first sentence... Corvette?

Eh just kiddin. If you can get 0% at a significantly reduced price, you've done well. Usually 0% only applies if you take the thing at or near sticker price.

pmar

The maximum you could save with 0% interest is $5000 in interest. A 5k rebate would not incent me to get a Corvette especially when they sell at list.

So which investment is it? IMHO something like a car payment and investments should be kept completely separate. If you invested in the last 18 months, you have lost big (I should say we). The S&P index is down 26% YTD, most mutual funds are down 26 to 68%. Many would be very very happy if they only lost 25% of their retirements.

Money market gives about 2.8-3%, so 7.99 would not be that bad. Give us some possibilities, we all need ideas. Forgo buying the car period is how you have the biggest and last laugh.

MaineI30

Unless you pay full retail for the car... then it's the DEALER who's laughing all the way to the bank, while you're noticing you have a bit of a sore bottom.