The last five cars I’ve owned have all been purchased by cashier’s checks. I loathe going into debt on an asset that is guaranteed to depreciate. In fact, I dislike buying anything that is guaranteed to depreciate!
I stopped by the BMW dealer on the way home from golf one day and checked out their new 650i coupe series. If someone could figure out a way to bottle that wonderful new car smell, they’d make millions off fanatics like me!
Given this particular 650i coupe was priced at $104,000, I decided to check out the more moderately priced 2014 X3, 2.8 litre engine SUV for $48,000. Same new car smell for half the price. Score!
CREDIT CARD LIMITS FOR CARS
Out of curiosity, I asked the saleswoman whether I can put the car on my credit card which has a $50,000 limit. She said, “Nope!” The most I can charge on the card is $3,000 What the heck is the point of carrying a credit card if I can’t charge a BMW on it? Gee whiz!
In actuality, the $3,000 limit is a good thing since I’d be tempted to buy a new car every single year! I asked her why the $3,000 limit? And she responded, “Fees, those darn fees.” Credit cards charge 1-2% fees on average for every single purchase. 2% on $50,000 is $1,000 out the door. Hey, kinda like PayPal fees, but not as bad!
I then told the saleswoman, “What if I just buy the car for 1% more than asking price, then can I use a credit card?” She thought about it for a moment and still declined. Of course I would prefer not to pay more than I have to for anything. I just thought this would be an interesting solution.
“Our policy, no matter what your credit limit is, is still $3,000 maximum. The reason is we don’t want people charging their downpayment, which then defeats the purpose of a downpayment. We don’t want a situation where a buyer purchases a car on credit, totals the car, and can’t pay either the payment or the costs necessary to fix the car! A buyer needs to have skin in the game, that’s our bank’s policy.” explained the saleswoman.
Wait, so she’s saying I can’t borrow money to pay for a down payment to borrow more money? What the hell kind of dealership / country is this anyway? I thought we can do what the government and millions of Americans do everyday and take from one, spend it on ourselves, and never have to pay it back!
CREDIT CARD LIMITS EVERYWHERE
The $3,000 credit card limit policy is ubiquitous. I called Mercedes, Audi, and Range Rover, and they all said the most someone can charge to purchase a car is $3,000. The rest must be financed by their own bank or paid in cash.
I was really looking forward to charging $50,000 for the X3 and getting enough rebate points for a round-trip ticket to Europe. Alas, I will settle for good old Moose, keep the $50,000 and have the optionality of buying 100 round-trip tickets to Hawaii instead.
* Manage Your Money In One Place: Sign up for Personal Capital, the web’s #1 free wealth management tool to get a better handle on your finances. You can use Personal Capital to help monitor illegal use of your credit cards and other accounts with their tracking software. In addition to better money oversight, run your investments through their award-winning Investment Checkup tool to see exactly how much you are paying in fees. I was paying $1,700 a year in fees I had no idea I was paying.
After you link all your accounts, use their Retirement Planning calculator that pulls your real data to give you as pure an estimation of your financial future as possible using Monte Carlo simulation algorithms. I’ve been using Personal Capital since 2012 and have seen my net worth skyrocket during this time thanks to better money management.
Earn Up To A $300 Bonus By Driving With Uber. Driving for Uber is a great way to make extra money when you want. I average $40/hour, and 20 hours a week. An extra $2,400+ a month in my pocket is fantastic spending money while having zero boss. Uber is giving up to a $300 bonus after giving your 20th ride for signing up. Sign up to be a driver today and work when you want if you want to make some extra cash. They pay every Thursday like clockwork.
Lower Your Auto Insurance Costs: Check out Esurance online. They have some of the best plans with the lowest rates around due to their lower overhead costs. It’s worth spending a moment filling out a quote to see if you can save some money. Car insurance is one of the largest ongoing expenses for car owners. Esurance has good driver discounts, and multi-product discounts as well.
Updated for 2016 and beyond