Taco purchase - question for you financial whizzes

What is your margin rate? If you can reasonably expect consistent returns on your account, the spread might be very cheap (some discount brokerages have low rates).

If you have the guts, you might also deduct the interest, perhaps creating a negative financing cost? I haven't crunched that.

"Mac" wrote in news:1099229091.116756@sj-nntpcache-5:

What about dealer financing? Most of the Dealers are giving away money at extrememly low rates my buddy got 0% financing on his Taco. The Caveat is that Factory financing is not offfered on the D-Cab's But if you are looking at the 04's and not the 05's they may offer it on the D-cab as they close out the 04's

Hadn't thought of that...guess I could do a home equity and write it off that way. I'll look into that. Thx.

The 4% was what the dealer offered. My credit union is 5.5% I think. Maybe I'll push and see if they'll do a 0% on the DblCab. Thx.

I would suggest that you shy away from using your 401(k). Many might argue that it is a good choice since you are paying yourself the interest. However, you always need to remember that in the event that you lose your job (hopefully this is not an issue for you), you are obligated to pay the outstanding balance within a fixed period of time (I think 60 days) or it becomes a taxable distribution with penalties. You also do not get recognition for your credit rating (this may not be an issue for you, or it may be a plus). Good luck.

go with a bank, unless you have some stock you can sell at a loss to recoup stock you can sell at a gain.

Never borrow from your 401K, you'll retire broke and I won't feel sorry for you when you're on CNN in 2020 living off of Alpo with a broken down Taco. Also, paying yourself interest is a crock. You're repaying a

401K loan with money that's been taxed twice - once when you take it out and again when you repay it, that's flat out not smart.

Get a bank loan and make extra loan payments

Please explain how borrowing from a 401k causes a taxable event?

Good catch, I should have said "You're repaying a 401K loan with money that will be taxed twice", it'll be taxed when you take it out, and your loan payments is from after tax income, that means every $ you put in to repay the loan has already been taxed. Now it's in the 401K plan again. When you take that $ out, it's going to be taxed again. You can't repay a 401K loan with pretax dollars. See

"It's not tax-sheltered money anymore. Whether you repay the 401(k) loan out of your salary or from a bank account, those payments are all made back into the 401(k) with after-tax dollars. So, let's say your monthly interest payment is $300 and you're in the 28% tax bracket. You'll have to make $416 in gross earnings to make the $300 payment. Then, when you retire and take withdrawals, you pay taxes yet again."

Some deal huh?

Then of course if you default on the loan or get laid off, your loan is considered a withdrawal, bam! Instant 10% penalty and taxes on it. Then of course you'll retire poor and broke and deservedly so.

Why not finance it through Toyota at 0% interest? I did.

-- Cheri

Sherrie,

Thanks for the input and education - makes sense.

Thanks to Bob H, Bob S, Steel Pig, and Cheri for the input as well.

Since I am a tightwad - I guess I'll hold out for the 0% financing Cheri mentioned :)

can't beat 0%!

That would depend on the other facets of the purchase..

I'll bite - such as what?

/shane

The old cash back vs 0% game would be my guess