New car loan and credit after retirement?

[rayvt]

I think that "don't borrow money on a declining asset" implicitly assumes that the borrower requires the loan in order to buy the car. IOW, they can't really afford the car, so they need to borrow the money for it. For people in that circumstance, the comparison of "invest at X%, borrow at Y%" is meaningless----because they have no money that they can invest at X%, Y%, or Z%. You can't compare two alternatives when one of them is truthfully non-existant.

For people who have adequate assets, it is meaningful. In fact, for a cash purchase they could consider it as "borrowing" the money from themself at an interest rate equal to what that money is currently earning. So the question then becomes "should I borrow from myself at 8% or borrow from the credit union at 3.99%?"

"A man who has a million dollars is as well off as if he were rich."

 

[Koolau]

I found the loan officer to be mostly concerned with income and not so much with assets. My saving grace is that I move money into my checking account every month from brokerage institutions. I was able to show these monthly deposits into their checking account and this qualified as meeting the income requirement - loan approved.

Related elsewhere, I got a mortgage last year. While the bank was impressed with my credit score, they didn't like my income because it was a relatively small pension and DW's smaller SS. What finally allowed us to get the mortgage was the "apparent" income generated in the past few years because I had converted traditional IRAs to Roths. Bizarre! Here, I was sitting on a pile of assets and all they wanted to know is what my tax return said I had taken as "income". The fact that I hadn't spent that income was immaterial to them. What a total crock. Still, it worked. So, to answer OPs question, it's important to show income in addition to your good credit score. Not suggesting you do what I did, 'cause I did it for other reasons.

 

[ERD50]

I think that "don't borrow money on a declining asset" implicitly assumes that the borrower requires the loan in order to buy the car. IOW, they can't really afford the car, so they need to borrow the money for it. For people in that circumstance, the comparison of "invest at X%, borrow at Y%" is meaningless----because they have no money that they can invest at X%, Y%, or Z%. You can't compare two alternatives when one of them is truthfully non-existant.

For people who have adequate assets, it is meaningful. In fact, for a cash purchase they could consider it as "borrowing" the money from themself at an interest rate equal to what that money is currently earning. So the question then becomes "should I borrow from myself at 8% or borrow from the credit union at 3.99%?"

Thanks rayvt - I think that is a good way to distinguish the two.

-ERD50