Jenny asks…
Buying a new car, is it better to take the .9% interest, or the $5500 cash back?
I’m interested in buying a new Mercury Grand Marquis LS. The price is $28,995. If you finance it for 60 months, with 10%down, you can get .9% interest. Or, you can get $5500 cash back. Which one is the better deal?
CSC101 Customer Service answers:
As a generalization, paying less is always a better deal… So in one case, you pay for the car outright, get the rebate, for a purchase price of $23,495. In the other case, you pay $324 a month for 60 months, for a total of $29,440 (including the $10k down payment). The former is about $6k extra in your pocket. Actual costs will be a bit more though as I didn’t include tax or license when I figured these numbers (and if you don’t normally carry full insurance, you will be required to in the case of financing the car which should be figured in as well).
So, as a generalization, paying up front will always work out to a lot less. Though, if you were to take the money saved by not paying up front, and invest it, you might come close to matching that $6k difference. The difficulty here is that as you go further along in paying off the loan, you will be working with less capital – thus making it easy at first to realize good returns, while tailing off as you go. The other plus on this route is that we are in an inflationary economy at the moment, and there is a strong chance that will continue, which means money is worth less over time, and effectively making borrowed amounts less in actual value.
If you can afford to buy outright, that will be the better deal unless you already have a solid plan to utilize that money in some other way that will net a better return.
Lisa asks…
deposit back on car deal when the trade in dies?
Car dealer test drove our trade -in van ( which had been giving us some trouble) and we couldn’t come to agreement on a deal so left. But over the week we negotiated and came to verbal agreement on the phone. I gave a $1000.00 deposit on visa which was cashed. The deal was subject to financing and the deposit was said to be refundable if financing didn’t go through.
We are waiting for the financing ( banks are slow as molasses!) The van’s been running worse. Today the engine light came on and I didn’t dare drive it home.
Question: What happens to the car deal? Is the dealership obliged to take the van anyways? Or does it cancel the deal, and will I get my deposit refunded?
I will argue this affects the car deal because I can’t trade in the Van anymore. It therefore changes the finance numbers enough that I can’t afford the car now. “subject to finance” = refundable deposit… Any suggestions or experiences to share??????
CSC101 Customer Service answers:
They have the right to cancel the deal but it sounds like they are going to get to you come in and resign for new numbers. Since the deposit is on a credit card you are protected as no services were rendered (file a chargeback if they won’t give it back) More than likely they were figuring your van for only a couple of dollars anyways so if the financing does go through as written, stick to the original deal and see what happens as you know you can always walk away with no obligation.
William asks…
Are there really any worthwhile car “deals” from a dealer, or are they all just hype?
Most car dealers seem to always have some type of “deal” going on at any given point. When you think about this logically, doesn’t this mean that if there is always a deal going on, that the prices are about the same no matter when you buy? You may get 0% financing one month, but the next month you get thousands cash back, and another month may be 0 down. Are any of these deals ever really “deals“? Isn’t it all just hype?
CSC101 Customer Service answers:
Some of the deals like rebates and low interest rate on new cars are really incentives from the manufacturer and the dealer is passing them along to you. Some promotions are worthwhile, others are just hype. You have to educate yourself or follow advice from someone that knows what’s going on to determine the best deal at any particular time. The internet has made finding the best deal easier. A lot of dealers will give very competitive price quotes on the web.
Courtesy of Y!Answers