Car dealer question: Taking cash out of a trade-in when purchasing a new car (pay, rate)
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I'm curious if anyone has ever had a dealer give them cash back while trading in a vehicle on the purchase of a new car. I wanted to trade in my SUV and borrow more than the difference with the new vehicle price to take advantage of the cheap financing.
Long story short the salesman said that was fine, then the finance department tried to give me the run around. I figured this was a pretty common request so I wanted to see what everyone thought. I'd appreciate any info.
Never done this before, but why would a bank loan over 100% on an asset that they know will deprecate. I think it will be hard to do this with any bank.
Yes, its no problem. I traded in a fairly recent model car (mistake buy on my part), got $5k back and used the balance of the trade in value for the downpayment etc. Factory rebates were great a the time with $4k or 0% financing, took the cash instead of 0%, then got $500 for financing with the manufacturer finance wing at 3.8%, then refinanced with my credit union for 2%.
Never done this before, but why would a bank loan over 100% on an asset that they know will deprecate. I think it will be hard to do this with any bank.
You are not financing over 100%, it is essetially reducing the amount of the trade in applied towards the new car purchase. I've never done it, but don't see why you could not ask for cash back.
For example, new car is $25K, trade is say $15K. Put $10K of the trade towards the new car as a down payment and get $5K cash back. Finance $15K at a cheap rate and you are getting the additional $5K loan at a cheap rate, maybe even zero.
No kidding. I didnt even put any money down on my cars. With less than 2% with the credit union the money is cheap. Sure i could have put money down or bought the cars outright, but there are better places for that kind of money.
Quote:
Originally Posted by ToyYot
Its amazing how whenever the topic of car loans or leasing comes up the peanut gallery has to come out and preach the gospel according to *whatever*.
Like everyone else this year, I'm making more on investments then 2% Aren't you? Leverage is not a dirty word if managed properly.
I did something similiar. I bought a car and paid down most of it. I had about 4k left that I owed. I then refinanced via PenFed(Credit Union) and borrowed $17k. I took the difference and used it to pay down my mortgage which was at a higher rate(even after factoring in tax deductions). That $13k payment combined with an annual bonus was more than 10% of my oustanding balance, so I was able to re-cast my mortgage and reduce my payments. Net result, I save about $70/month in interest due to the rate difference alone. That's combined with the fact that I'm paying down my total debt faster because I took money that was essentially on a 30yr repayment plan and set that small(ish) piece to be paid back in 5.
I'm sure the dealership wouldn't have let me do it, but a credit union had no problem lending me money secured by an asset since I wasn't going over the total value of the asset.
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