Author Topic: Large purchase - payment options - what would you do?  (Read 963 times)

jane x

  • Pencil Stache
  • ****
  • Posts: 589
Large purchase - payment options - what would you do?
« on: March 14, 2018, 04:11:11 PM »
We've signed up with Costco for an installed product for which they offer member financing and we're trying to figure out which payment option would be the most wise.  Looking to finance-savvy mustachians for help.  Here are the options:

Purchase price = $14,000

Option 1:  Costco 18-Month Interest-Free financing

Option 2:  Costco 48-Month 2.99% Interest financing

Option 3:  Pay for with Costco Citibank visa and get a 2% cash rebate and pay off the full balance by selling $14,000 worth of stock that has been earmarked specifically for this purpose.  With the stock market performing well the last couple of years, we've made a good profit on this stock.  Maybe it's a good idea to take the profit in case the market takes a downward spiral in the next couple of years based on recent trends?

As an aside - has anyone used the Costco member financing? 

peeps_be_peeping

  • 5 O'Clock Shadow
  • *
  • Posts: 91
Re: Large purchase - payment options - what would you do?
« Reply #1 on: March 14, 2018, 04:24:43 PM »
I would choose the 18-month interest free financing and sign up for 18 equal auto payments on that loan. I would be reluctant to pull money out of investments, even if I already earmarked it for this purchase. I would rather keep my money invested and save a little bit less in order to finance the item for free. The 2% cash back is only $280, far less than the $14,000 would appreciate in 18 months if kept invested.

lhamo

  • Walrus Stache
  • *******
  • Posts: 9833
  • Location: Seattle
Re: Large purchase - payment options - what would you do?
« Reply #2 on: March 14, 2018, 04:30:37 PM »
Can you make the payments on the interest-free financing deal with the credit card?  If so, I'd probably do that.

You could also go ahead and sell off the stock now to lock in your gains and still do the financing deal.  Or go half and half -- cash out some now and let the rest ride for awhile.

trollwithamustache

  • Pencil Stache
  • ****
  • Posts: 670
Re: Large purchase - payment options - what would you do?
« Reply #3 on: March 14, 2018, 04:38:11 PM »
the 2% is both tax free and risk free. Making it worth much more than 2% in future stock market gains.

Also if you want to play games like this and are comfortable assuming the stock market will go only up over the next 18 months, will there be unforeseen costs moving gains into 2019? (if other gains hit that year?)