I'm going to sell my 05 C6 and get a C7. I figure I'll get around $15-17K for it.

My C7 budget is going to be around $45-48K out the door, I was thinking of using the $15K from the C6, and another $20K from cash. For the balance I could either use my HELOC or finance the balance. I actually have the cash to buy a new C7, but I don't like burning cash on cars.

If I use my HELOC, I'll pay about 3.5% interest, but I do get to write it off. If I finance, I'm not sure what rate I'll get, but I have excellent credit.

I'm trying to figure out if I should finance a lot of the price of the car and deal with a $6-700 car payment, or put $35K down and have a $300 payment. I'm not gonna get rich on the interest for $35K, but I don't want to throw away money either.

My struggle is that I have never had a car payment, I've always paid cash for cars a few years old but with warranty left. I maintain and fix them myself. I've been in a Corvette for the last 20 years and can handle a wrench.

I'm going to try and find a 2016+ 2LT Z51 car with Mag ride. I am thinking I would like a vert this time, never had a vert Vette. I am not going to buy new, cars depreciate a lot in the first few years and I'd like it better with someone else absorbing that. I don't care if I'm not the first to fart in the driver seat.

Any thoughts on the financial side of this?

 

Your HELOC can be used for whatever you like, but buying a car with it is NOT a tax deductible expense. For what it's worth, I would never tie home equity to a luxury expense. If you fall on hard times, etc., you can let the car loan lapse. You can't let that HELOC payment lapse. Home improvement, repair, etc. is tax deductible up to a point - but your Corvette, definitely not. Read this for more info:

https://www.investopedia.com/mortgag...ax-deductible/

Compare your out of pocket costs vs. interest over time and make your best decision. If it were my money, I'd look at a new Kerbeck car with 2.xx % financing and put down your $15K from the C6 and finance the rest.

Greg

 

do you have nay other loans?

 

A HELOC loan for a car up to 100K was tax deductible through 2017. It is no longer deductible under the Trump tax plan.

 

Kerbeck offers 2.19% on new finance...I'd do that deal and finance the whole thing.

 

Put the 35 down and finance the rest on a new one a vert and drive it for 6 years and sell it for 30 % of new. Good deal. Jeffer

 

With a 3% loan interest rate, I paid $2500 minimum down and financed the rest of the purchase price.
I believe I can retain the cash for other purposes while making well over 3% in investments over the term of the loan without much difficulty.

 

I was going to buy my C7 in cash but ended up financing a little more than half of it because I got 2.19% (or something like that) from Kerbeck. I figure I may as well keep that $40k investing for me and just pay the $600 per month.

 

Thanks for the info so far.

Right now I have no debt other than my house. I have gone so far as to do solar and update my house to lower bills, I'm 55 and planning for retirement to include continuing to live like I do now until I can't. I have also turned cheap apparently as I am getting older. Not cheap where I give crappy tips at a restaurant, but more to the point that I will not make $600 payments on anything. I don't like debt, so no way I would consider $600 or more a month for a car, I'd just buy an older car or drive what I have longer. I guess I've drawn an invisible line at $300 or less a month.

I won't buy a new car just for the fact that I will not absorb that kind of depreciation.

I'd love to hear peoples ideas for high yield investments, right now it's hard to get 2% without risk, which as I get closer to retirement is not something I want to do.

So back to the car. I'm thinking a used car loan rate will be around 4%, which is higher than my HELOC rate. So that doesn't make sense. Money is money, using a HELOC vs a car loan still creates debt.

 

I bought my 15 C7 for 71K out the door-put down 5K when I ordered and another 37K in cash when the car came in and financed 29k with a 2.19% interest rate for 5 yrs-- translating into a 510 per mo. payment.

I did what was financially comfortable emotionally for me and just figure out what combo works for you emotionally. I would not use a home equity loan for anything that did not fall under the category of necessity.

 

I think you know already that the smartest financial move is to sell the Corvette and go pay cash for a used Toyota Corolla or some other economy car and drive it into the ground but we know this is more about the love of Corvettes.

That said, you could buy new as some have mentioned but lower your expectations on the trim level to stay within your budget. For example, I bought a leftover 2017 1LT C7 with just Z51 spoiler and wheel upgrade for $47k back in Nov. The C7 base is quite an upgrade over the C6 and is probably the best daily driver of the bunch since it does not have the dry sump, track focused brake pads that produce copious amounts of brake dust, stiffer suspension and depending on year more expensive tires to replace. The mag ride will help but then you have to consider the higher cost of the mag ride shocks should they fail post warranty. In base form the C7 still out handles a C6 Z51. As you know, the benefit of buying new is the full term of the warranty, better interest rate and I do like the fact that I know how the car was treated from the start.

I have used my HELOC before to finance cars. It is ok as long as you are disciplined enough to pay it off and not just let the debt sit there while the vehicle depreciates. The tax advantages on the HELOC may be changing though so keep an eye out for that.

 

Home equity loans...2018 tax law.
No interest deduction when used for cars, schools, etc.

 

There are some great deals out there.


https://www.columbusvette.com/used-corvettes.html

 

Keep your cash in your pocket is always what I do. Never know if you might need it for a rainy day. If the bank is willing to give you the money at a decent rate there is no reason not to take it. 15k is a decent deposit I’d finance the balance.

 

depending on how long you might want to keep the car, the Pen Fed balloon loan can be a good deal...works like a lease...cheap up front then you either buy the car for the balance - like end of a lease - or sell it yourself to pay off the loan. Its a bet on the residual value.
On my GS I'm paying $275 a month for three years...light mileage...expect to sell it above the loan balance at the end of term...or buy it for the balance and keep it...I too could have paid cash...I just put it in a three year CD so its there when term is over.

 

Put the cash down on it so you don't spend the next 3-4 years spending as though you have the Corvette AND the cash, which you no longer do. But if you don't put that money down and keep it in the bank instead, you might spend more freely.

You should, however, keep two months salary in cash (and not for an engagement ring!). But that's money you never touch for stuff like purchasing things, it's emergency money. If you don't have that set aside already, do it now! And never, never touch it.

I assume you're buying a used C7? That's the smartest thing you can do if you can find the cherry owned by the lawnchair-sitting, Hawaiian-shirt-wearing waxer garage dude!

 

I agree that car payments suck.

As for financing, I'll suggest that if you buy a new car, the teaser rates often offered are awfully tempting.

If you plan to keep the car for a while, then that first year's depreciation, strung out over several years, isn't too bad. There are some real deals to be had on new cars, enough so that I don't find the minuscule savings for a slightly used car to be worth it (in my market Corvettes sell for pretty good money, so I buy new from NH and then sell them here after I get tired of them).