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.
FAVORITE CREDIT CARDS
Barclaycard® Ring MasterCard® – 1% Back on Balance Transfers – This great card has the lowest APR I’ve seen in the market today at 8% compared to the average credit card interest rate is 15%. You get 1% back on all balance transfers made in the first 60 days of opening an account and there is no annual fee or balance transfer fee. There’s a fantastic social community of Ring MasterCard holders once you join to interact with and save money.
The Hawaiian Airlines® World Elite MasterCard® – Hawaiian Airlines is hands down the best airlines in America. Their service is impeccable, they provide food, snacks, and drinks included in your air fare, and each seat comes with a USB charger. This Hawaiian Airlines card gives 35,000 bonus miles if you spend $1,000 within the first 90 days, gives you one complimentary bag to check-in, and a one-time 50% off discount off your companion’s air fare! Round-trip ticket prices range from $450 – $1,200, so that’s a $225 – $600 savings right there to paradise! You also get $100 off a companion tick for roundtrip coach travel between Hawaii and North America each year, 1 point for every $1 spent, and 5,000 annual bonus miles after $10,000 in annual spend. The annual fee is only $89. Oahu is my home state and it is the most beautiful place to vacation!
Check Your Credit Score: Take a moment to check your free TransUnion credit score through GoFreeCredit.com, a company I trust. 30% of credit reports have errors, which could put a serious hamper on your refinancing or new loan borrowing abilities. I had a $8 late payment I didn’t even know I owed crush my score by 100 points come up during my last refinance. The average credit score for rejected mortgage borrowers has risen to 729 due to more stringent lending requirements. Do you know what your score is?