vehicle buying question

[chrisaukcam]

So the plan originally was to buy a gently used truck to pull a travel trailer and travel a bit when we retire in February. The stocks rallied well in spring of 2018 and so I saw that we had made enough to buy a new truck from those gains, so that was put aside to make a cash purchase after retirement.

So I was looking at incentives on new vehicles. I saw that they have 0% financing and with my credit rating I should qualify. If I could get like a 3 year loan at 0% interest, then I can make a little extra if I put the money into CD's and cash them as needed for payments.

Then I got to thinking that with me retiring next month that I won't have a job and even though I will be making withdrawals from my 401k for living expenses, I don't know how that income is treated when doing a loan. I am guessing that others have gone down this path - how would this work with just passive income?

Finally I got to thinking, I could make the purchase here January - while I am still working so technically I can put down my current income, etc. It would be a bit devious to do this way, that could be an option if I would not qualify otherwise.

 

[Aiming_4_55]

I'm not retired but understand it's easier to qualify for a mortgage or car loan with documented income, i.e. W2, pension, ss, etc. so I would recommend getting the loan before leaving employment. Good luck and congrats!

 

[jazz4cash]

I see no problem with applying while still working. Not devious at all. You could change your mind or decide to get another job. It’s a smart plan IMO.

 

[Jerry1]

I just bought a truck, new, having been without income for over ten months at the time. They didn’t flinch. Your credit rating will be fine and when asked about income use either your last tax return our your expected withdrawal/expected income. Whichever makes you feel better. Seriously, I explained my situation and they just didn’t care. He basically said, just give me a number. Financing went through in a matter of minutes at the dealership.

 

[ocean view]

We got a 5yr 0% auto loan last spring, we have been retired 3 years. Our credit score is >800. On the income line on the loan application I entered my estimate of our 2018 taxable income. What the auto loan folks didn’t need to know was that most of that “income “ is from Roth conversion, moving assets from one pocket to another. They may have asked for the source of the income and I said investments. They were content with that answer and the income number I filled in. They are not going to check. With our credit score, that part of the application was really just a formality. It sounds like you will likely have similar results.

Good luck

 

[pb4uski]

.... Finally I got to thinking, I could make the purchase here January - while I am still working so technically I can put down my current income, etc. It would be a bit devious to do this way, that could be an option if I would not qualify otherwise.

Well, if it is devious then I got you beat on a larger scale... I refinanced just before I retired... in fact, I was done working but was "on vacation" and still on payroll when they did the income verification just before closing.

I've had two car loans since I retired... in each case they just asked me what my income was and I told them a number that was roughly the income from my last tax return... they never asked for anything beyond that... I could have been totally blowing smoke up their a$$ and they would never had known. And never mind that a lot of that "income" was Roth conversions where I was moving money from one pocket to another.

 

[Bamaman]

Banks and loan institutions base their loan approvals off FICO scores. Often, approvals are automatic by a computer and no individual even looks at the deal. If you are not immediately approved for an auto loan, all you have to do is document that you have the cash to pay for the vehicle and it's a done deal.

Retirees purchase vehicles on car loans every day.

 

[marko]

As Bamaman said, retired folks buy cars with a car loan every day.

No loans per se, but DW and I both have fairly high-end leases on two luxury cars (~$2K per month total).

Neither of us have worked in over a decade. We just stated our investment income. Our leases were approved while we had a cup of coffee at the dealer.

I commented on it and the salesman said: "Well, that's what got this country into a mess back in 2008, isn't it?... (now, just sign here)".

 

[Bamaman]

As Bamaman said, retired folks buy cars with a car loan every day.

No loans per se, but DW and I both have fairly high-end leases on two luxury cars (~$2K per month total).

Neither of us have worked in over a decade. We just stated our investment income. Our leases were approved while we had a cup of coffee at the dealer.

I commented on it and the salesman said: "Well, that's what got this country into a mess back in 2008, isn't it?... (now, just sign here)".

The truth is that the auto manufacturers have raised prices on vehicles so much that John Q. Public cannot make the payments easily. When you get into the luxury cars, $50K financed is about a $950 monthly payment. And pickup trucks are in that range.

Manufacturers have been greedy on pricing and leasing is the only way that regular income people will afford to drive their vehicles. Leasing will be more prevalent in the future than in 2008.

 

[ExFlyBoy5]

Manufacturers have been greedy on pricing and leasing is the only way that regular income people will afford to drive their vehicles. Leasing will be more prevalent in the future than in 2008.

Have you seen what a car can do these days? Some is required by government regulation, some is by consumer demand, but I don't know that I would say they are "greedy". And there are still plenty of cars out there that don't cost $50K.

 

[Jonesee]

The truth is that the auto manufacturers have raised prices on vehicles so much that John Q. Public cannot make the payments easily. When you get into the luxury cars, $50K financed is about a $950 monthly payment. And pickup trucks are in that range.

Manufacturers have been greedy on pricing and leasing is the only way that regular income people will afford to drive their vehicles. Leasing will be more prevalent in the future than in 2008.

At this point I would guess ride sharing and subscription car services will be in the future.

For large metro areas, maybe sooner rather than later. Out in the square and fly over states it isn't feasible now.

As another poster stated, there are cars for almost all budgets now.

 

[bloom2708]

Find a 4-5 year old diesel pickup that someone babied with 70k miles or something.

Diesel's go 200k, 300k. Find someone that wants to always drive new. Pay cash. Pulling an RV it will get used fast anyway.

 

[Independent]

When the manufacturer provides a 0% loan, it has to borrow the money somewhere at some rate higher than 0%.

My guess is that sometimes the manufacturer just eats the loss as a discount that's only available to people who want to borrow. Other times, the manufacturer passes some of the cost along to the dealer. If it's the second, the dealer should be willing to provide a better price on a cash sale.

 

[MikeD]

Manufacturers have been greedy on pricing and leasing is the only way that regular income people will afford to drive their vehicles. Leasing will be more prevalent in the future than in 2008.

I'm of the opinion that it's OK to be greedy.

I also think that things that can be paid for in payments seem to get more expensive pretty quickly because the payments seem smaller and far away.

I also think part of the high prices of drugs are because the gov't pays for them, in part, by interfering in the free market.

Of course, I just could be an idiot daring to express my opinions in a polite and friendly way!

Mike D.

 

[jazz4cash]

New cars go over 100k without a tuneup. My 1st new car in 74 needed plugs, points and carb adjust every 3k. Dealer margins are way tighter too. Used cars < 5 yrs and low miles (off lease) is where the value is. You can still buy a new car with decent features for under $10-12k. Warranties are better too.