Tempted to trade my 2013 GS350 for a 2018 Stinger GT2...dealer asking 41g OTD

[Kgh31386]

I have a 2013 GS350 F-sport with 60k miles. I bought it in 2016 with 30k miles without financing anything. So it's paid off and Lexus certified until December, 2019. It's always tempting to window shop and I'm close to pulling the trigger based on what the dealer was showing me. I really liked the GT2 when I drove it. Here's the basic breakdown of what the dealer is offering on a fully loaded GT2 AWD.

I asked about lease vs. paying cash vs. financing at a low rate. He ran the numbers based on "balloon financing" with my trade valued at $22,000. I've never looked at balloon payments or financing in a long time.

MSRP $52,000 and change with the remote start
Competitor trade rebate $2,000
Dealer discount $3,000
**Lease rebate $7,800 (apparently lease rebate still applies if I do balloon financing)
Adjusted sales price $39,200 plus TTL (doc fee is $149, taxes, etc.)

My trade $22,000(0 owed)
Final balloon payment in 3 years= roughly~~~$19,500
My monthly payment for 3 years until the balloon payment is due...$0/month.

Am I missing something, or doing something terribly wrong in my math? Assuming a RV of 51%, I theoretically could trade the car in at 3 years and they end up cutting me a check for $7000.

 

[MisterMac]

Best advice, sell your gs350, and apply the cash down payment on the lease, so you get the huge rebate. Then, immediately refinance at your credit union for a very low rate. For instance at the credit union I run, you could get 2.24% for four or five years.

 

[Kgh31386]

When would doing the balloon payment end up being better than the lease? If I did the lease, I suppose at the end of the 3 years...I just turn the car in and get another car. But my thought with the balloon payment is since my payment is $0...I put $550/month away into a little car fund. At the end of 36 months, the residual of the car SHOULD be higher than the balloon payment. In essence, they could cut me a check for the difference since the value of the car is higher than the balloon payment when I trade it in. I would put that difference with another $20,000(the $550 month x 36 months) and do it all over again. Or I just keep the car for 5, 6, 7 years and have a happily warrantied car that was bought new.

 

[Hamburger1971]

Edited - just realized there's a $3k dealer discount, for some reason I read that as one of the rebates. My bad .

Still think a $3k discount is too low, but maybe that's competitive.
__________


That feels really high- what's the discount they're offering against MSRP? It looks like they added the rebates and stuff to MSRP, but you should be starting way lower than that. It's a 2018, no way that should be the starting point.

$52k MSRP
$47K after discount (give or take)
Less $12,800 rebates
$34,200 sell price

Then $22k for your trade after that. Anyone else think so?

 

[MisterMac]

What state are you in? We'd have to talk. I finance millions of dollars in cars every month, and have cut about twenty years.

 

[Kgh31386]

Texas

 

[MisterMac]

Texas[/QUOTE

Texas, one of only four Ayres that allow balloon notes. What is the rate on your balloon loan they've quoted you?

 

[Kgh31386]

I think it was something up there like 5-6%. But if my trade is covering the entire balance of the 36 months, would the interest rate even matter? It'd be like financing a car for 40% interest, and paying it off before the first payment is due. Is there interest on the balloon payment if there's no true monthly payment?

 

[MisterMac]

The interest rate will apply to the full loan balance over the entire time. 6% on $20,000 is $1,200 interest per year, plus interest in the interest.

That's why you should refinance the balloon note immediately. You'll benefit two ways: in reducing the rate of interest, and by reducing the principal you are paying interest on. Likely about three grand, net.

 

[MisterMac]

Ask them for a full amortization schedule for the loan, then you'll know for certain.

 

[Kgh31386]

It won't me PM for some reason. But what would be the reason to refinance the balloon if I'm paying the 36 months in one lump sum up front, then the balloon at the end? If I refinance, would I still be able to pay my bank or whoever a lump sum, then have a smaller balloon at the end? I planned on the trade counting as one big payment. Just trying to see the benefits of refinancing it.