We are getting ready to purchase a 2012 Sienna. They are offering 0 percent financing or $1000 off the price. I am 65 and still working. The vehicle is for my wife to replace a car that has reached the end of its life. We have the money in savings although it will definitely take a good swath out of it. Our retirement plan is in pretty good shape.
We are leaning toward taking the $1000 and buying it outright. Anyone see a different angle on this?
Toyota Sienna Offer - 0% or $1000 back
Re: Toyota Sienna Offer - 0% or $1000 back
We made more money with the 0% deal. Did you do the math?
This signature message sponsored by sscritic: Learn to fish.Re: Toyota Sienna Offer - 0% or $1000 back
Opportunity costs.
If you pay cash the car is $1k cheaper, but you lose the opportunity to have that money working for you. To answer this we would need the cost of the car in cash, and for you to tell us where you are keeping your cash.
At 5 year financing, if you keep the $30k (an ever decreasing amount as you pay off the 0% loan) in an account earning 1%, I suspect you would earn slightly less than $1k in interest, so paying cash might make more sense, unless you have an opportunity for higher returns than 1%.
If you pay cash the car is $1k cheaper, but you lose the opportunity to have that money working for you. To answer this we would need the cost of the car in cash, and for you to tell us where you are keeping your cash.
At 5 year financing, if you keep the $30k (an ever decreasing amount as you pay off the 0% loan) in an account earning 1%, I suspect you would earn slightly less than $1k in interest, so paying cash might make more sense, unless you have an opportunity for higher returns than 1%.
Re: Toyota Sienna Offer - 0% or $1000 back
Be sure not to settle on just $1000 off the list price. You should negotiate a substantial discount off the MSRP and then get the grand off that.
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indexfundfan
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Re: Toyota Sienna Offer - 0% or $1000 back
Even if you take $1000 back, you can still take a loan from elsewhere. E.g. Penfed is available at 1.99%.
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Valuethinker
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Re: Toyota Sienna Offer - 0% or $1000 back
Just that you may be able to get more than $1k discount-- dealer might have sensed you were a cash buyer, so is trying to 'entice' you into paying a higher price, by the offer of a cash discount.kilns wrote:We are getting ready to purchase a 2012 Sienna. They are offering 0 percent financing or $1000 off the price. I am 65 and still working. The vehicle is for my wife to replace a car that has reached the end of its life. We have the money in savings although it will definitely take a good swath out of it. Our retirement plan is in pretty good shape.
We are leaning toward taking the $1000 and buying it outright. Anyone see a different angle on this?
Personally I prefer lower price, cash saved up front. $1k is $1k. Invest it in Vanguard TSM, it could be worth say $1400 in 5 years time.
Re: Toyota Sienna Offer - 0% or $1000 back
If you do the math (paying cash and getting $1,000 off, or taking the 0% and investing the purchase price) I bet that both options are pretty even as far as total return. In that case, I would much rather hold the $30,000 cash for "emergency / cash flow" purposes and take the 0% loan.
Re: Toyota Sienna Offer - 0% or $1000 back
You can save even more money by geting a 2-3 year old used Sienna. In 2010 I bought a 2008 and I've had no problems with it.
“If you want to feel rich, just count the things you have that money can't buy”
Re: Toyota Sienna Offer - 0% or $1000 back
To echo what has been mentioned, I would try to do better than the $1K off. I'm seeing right now online the corporate Toyota incentive is $750 on a Sienna. So your dealer is really only adding $250 to that. I think you can get them to throw in a little more to make the deal.
Personally my humble opinion I'd take the financing, as I would then take that money and put it in some investment slightly more risky than a savings/money market type account.
2-3 year used as mentioned is a decent option in some cases, though with Toyota's high resale it may not save you much vs. new, and consider their warranty is only 3yr/36k, so you're potentially at risk for repair bills down the (relatively short) road to save only a few thousand.
Personally my humble opinion I'd take the financing, as I would then take that money and put it in some investment slightly more risky than a savings/money market type account.
2-3 year used as mentioned is a decent option in some cases, though with Toyota's high resale it may not save you much vs. new, and consider their warranty is only 3yr/36k, so you're potentially at risk for repair bills down the (relatively short) road to save only a few thousand.
Re: Toyota Sienna Offer - 0% or $1000 back
The lender may require that you have car insurance with a relatively low deductable.
If you normally choose to have a higher deductable then than the lower deductable may raise your insurance rates. If this is the case then you need to factor that into your decision.
If you normally choose to have a higher deductable then than the lower deductable may raise your insurance rates. If this is the case then you need to factor that into your decision.
Re: Toyota Sienna Offer - 0% or $1000 back
If you take the lower interest rate, and something happens to the car (stolen, wrecked, etc.) the insurance will pay off the car (mostly) and the advantage of the low cost loan is gone. Alternatively, if you get a lower price, the benefit is yours no matter what happens to the car. The lower price is the "bird in the hand". The lower rate is the "bird in the bush" and you do not get that benefit unless you pay off the loan over time (not with an insurance payout).
Jeff
Jeff