Advice needed on financing a car

Parent Cafe
21

Yers ago I bought my first car with a loan from my 401k. I was borrowing money from myself so the interest went back to me. I have no idea if that is still an option.

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22

Kind of wished you had asked about cars before buying. $10k could have bought a nice used EV (Chevrolet Bolt EV) without needing a loan on top of that.

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23

I’m going to call and ask about that on Monday - because I don’t know, either!

24

You can borrow against 401k not IRA, and the interest does go back to you.

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25

Oh, one more thing about Carvana: if you have a Credit Karma account, you can get $500 off your purchase.

26

So I think I have a 403b


27

Talk to your administrator, most likely you are allowed to borrow against 403k.

  • Tax Implications:

Repaying a loan with after-tax money and then later paying income tax on your future distributions essentially means you are taxed twice on the loan amount.

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28

For a car? My credit card is lower than that. Any company that gives you a 20% interest rate and doesn’t give you the option to use your own bank, in my opinion, should be erased from consideration. There are plenty of other car dealerships that can give you a better deal than that. I usually like to come in with a financing letter from my bank as a bargaining tool.

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29

When we bought a car, we were able to put the balance on our intro credit card that had 0% interest for 1st xx months. You just had to pay minimum amount and pay off the entire balance before the xx months expired. We paid it that way and were able to pay from current income.

Credit unions sometimes have good rates for financing cars, especially if it’s for much less than the purchase price (lower risk of having to repossess).

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30

We got 0% financing on our current car that we bought new from our local dealership. I saw no reason to put a big chunk of money down when it didn’t cost us anything to spread out the payments over four years.

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31

That was smart. It used to be you could choose from 0% interest or a price discount. But when we shopped recently, only the low interest offers seemed available. (I do think if we had traded in our old car there was wiggle room there.)

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