$1,000 cash back or 3.9% for 60mo's

[Fortyounces]

In the process of finalizing the purchase price for an '05 SR5 V6 for around $27k.

Which is my better option? Take the $1,000 cash back or take the 3.9% for 60 months financing?

I'm only planning on dropping about 10% as downpayment so I would imagine that the 3.9% would end up netting me a bigger savings than the $1,000 cash would.

Any thoughts??

 

[sharp4runr]

If you can get better financing from a bank or online site, take the 1k cash. If not, I'd take the 3.9% because in the long run it'd save you money and you're already putting down a good chunk of change so you wouldn't be upside down on your loan.

 

[<<<<]

I would never finance for 60 month even @ 3.9%, because you'll always owe more than truck is worth as mentioned above. Also that interest will add up to a lot in such a long time. I would negotiate the hell out of the deal before telling which option I'd take and then take a grand. But trust me grand is nothing on a new car purchase. Stealer wins anyway, because that's Toyota's incentive and not dealers... I could go on forever, but butom line is- dealer has not given you a thing when you get a $1000 or 3.9% financing, Toyota of North America did. So negotiate and show no mercy. Good Luck.

 

[Gunther]

Hey all!

It's been a while since I posted here but I have been lurking to keep up with everything!
This question brings up another, related one from me... I will be paying cash, but how does the $1000. cash back work in my case? Do I just take it off the top or what?

Thanks!
Gun

 

[2005 SPT V6]

They would use the rebate as a down payment. They will calculate the out the door price and then subract the $1000.

There are some Credit Unions with 3.9 interest, if you could get that then you can use the $1000 rebate on top of it.

 

[Hank]

Take the $1000 cash back if you can get financing elsewhere that's less than 3.9%. At the time I bought mine (May'04), Toyota had 0% for 36 months or 2.9% for 60 months, which were pretty good deals. Regardless, you must consider how much $ you'll be paying over the long run if you do finance (i.e.- 1.9% for 60 months may seem like a good deal, but you'll still end up paying a few thousand $ on interest if you take all 60 months to pay it off). Best advice is to pay it off asap when financing and to do the calculations of all the different loan scenarios before you get a loan. Use a loan calculator online to do the math (e.g- bankrate.com).

 

[ToolmanJohn]

Already some good advice

If you have any financial software at all, use a loan calculator to figure it out. I assume you will be putting some money down and maybe a trade? That should be a fixed known amount.

Now you now that no rebate rate is 3.9% (BUT that can be negotiated as well!!). You can tell the dealership that 3.9% is low, but you will see another dealer if they won't lower the rate. Your credit rating plays a big part in this. That's almost exactly what I did, and the lowered it to match the Credit Union rate that I had already qualified for. The stealership was telling me that 3.9% was not guaranteed, and I couln't do better

If you take the rebate, and you are still out at 60 months, you neeed to figure what interest rate will get you ahead. Again, you need a financial tool to figure the payment and most important the total cost.

Use Quicken or Money , both programs have these calculators.

Using your numbers: $27,000 TOTAL cost (with taxes blah blah), 10% down $2700, 3.9% is $476/month future cost $28,620

Rebate instead at 3.9%, $457.82 future cost $27,620

These numbers are very approxiamate, but putting more money down lowers the long term cost of ownership (less interest on loan amount). Go for the reabate and a lower rate

 

[hre814]

Do you plan on making payments for the full 60 months, or do you plan on paying it off before then? I took the 60 month finance with a low rate to decrease my payments, then had the truck paid off in 1 year.

 

[Fortyounces]

I definately do not intend on stretching it out to the full 60 months.

Although I won't be paid off in a year, I would say 48 months maximum.

I intend on paying an extra $35-50 a month and throw a good portion of my bonus next year end in and I should be done in less than 48.

Unless I hit the lotto or something between now and then