Long story short, a family member has offered to pay for a new car for DW. We asked if we could just take the gift as cash instead, but they said no, they wanted to see the impact they had as we drive every day or whatever. She needs a different car than the one she has, as hers is near the end of its life, so we aren’t going to flat out refuse the offer. I know that a used car would save us money from an insurance standpoint, but we don’t want to cause a family feud over this.
So as money is almost no object (family member’s words) the car we would get would be about $30k after all fees, etc. The dealership is offering 0% interest for 48 months. We easily have the cash flow to cover the monthly payment for this. I don’t know if there is a cash bonus alternative or not. The family member would be fine writing the check to us and having us do the 0% financing. If the market were to tank, we could afford to still pay the loan with our jobs. Worst case scenario (market tanks plus we both lose our jobs), we have enough in liquid assets to continue to pay the loan and not go bankrupt or anything, plus we would just sell the car.
My questions:
• Is this a good idea? She has a somewhat limited credit history, so having a “free” loan would help build her credit. If she were to be denied the 0% loan, we would just pay cash.
• It looks like a cash bonus would have to be about $3200 to beat an investment earning a conservative 5% for 4 years. (Can someone math check me?)
• Anything that I might’ve missed in my thought process here?
Obviously leveraging investments is riskier than not leveraging investments. I’m just trying to see if anyone else would do it given the same situation, because being able to hurl an extra $30k into the market seems like a great opportunity to speed up FIRE.
