Buy a New Car FREE and make
money!
Yes,
use and enjoy a new car and pay no money and later make money.
No,
you don't need to use the new car for business, no need to rent it out.
Just use it for your leisure or necessity.
Is
it possible? It works for me and I used the strategy which I am going
to share with you now.
The
key idea is - Combining Financing and investment Strategies.
I will be illustrating a few cases reflecting different financial
situations of the new car buyers.
Case A: Use full financing. You have the ability to
pay the monthly installment. Your spare money is used for investment.
Case B: Use full financing. You have the spare
money, but no extra regular income or salary to pay monthly
installment. You use the spare money for investment, partly used to pay the monthly
installment.
Case C: Use full financing. You don't have the spare
money but you have the budget to pay the monthly installment and have
some monthly
saving for investment.
In all cases, we use investment instrument that can generate
fairly consistent 10% annual return. (We will discuss in more
details such investment instrument later, as this is to illustrate how
this Financing and Investment System works first.). And in all cases,
the computation does not include you maintenance cost, usage e.g. fuel
cost.)
Case A: Use full financing. You have the ability
to pay the monthly installment
(e.g. from your monthly salary or business income). Your spare money
is used for investment.
|
New Car price |
$104,000 |
|
|
Max loan 90% |
$93,600 |
|
|
Loan interest |
3.00% |
|
|
Loan Duration |
7 years |
|
|
Monthly installment |
$1,348 |
|
|
Down Payment |
$10,400 |
|
|
|
|
|
|
Available Cash put in Investment |
$93,600 |
|
|
Investment return |
10.00% |
|
|
Monthly profit from investment |
$780 |
|
|
|
|
|
|
Net Payment on installment |
$568.29 |
($1,348-$780) |
|
7 years installment payment |
$47,736 |
$568.29 x 12 x 7 |
|
Total Cost (net installment + down-payment) |
$58,136 |
$(47,736+10,400) |
|
Resale value of the car |
$60,000 |
Assumption |
|
Net Gain (Make money!) |
$1864 |
$(60,000-58,136) |
|
Note: Your original cash $93,600 is
still intact, it is still yours to generate more investment
return. You can start another round, buy another new car, free
and make money 7 years later. |
| In my case, I traded in my old car
for RM 21,500 and I get a cheque of RM (21,500-10,400) = RM
11,100 from the car company, which can generate RM 7770
investment return, then my total gain is RM 9634 after using the
Free car for 7 years. |
This strategy, buy a new car free and make money, works
because:
- Use full financing at lower interest rate , when you can
get more investment return from your spare money.
Case B: Use full financing. You have the spare
money, but no extra regular income or salary to pay monthly
installment. You use the spare money for investment, partly to pay the monthly
installment.
This can be the case for those having no regular income, or retired
people without employment.
We will use the same data like car price, full financing etc.
The only difference is, after the down-payment, the spare cash of $93,600
will be put in the investment instrument that generates 10% annual
return. Every month draw $1,348 to pay the finance company as
monthly installment. The reduced investment sum will continue to
generate 10% return.
At the end of 7 years, there is still a balance of $25,997
(detailed calculate not shown, but you can request for it), i.e.
instead of paying the full amount for the new car, now with
financing and investment, you now have a cash advantage of
$25,997
|
Cash Advantage |
$25,997 |
|
|
After deducting the down-payment cost, balance |
$15,597 |
$(25,997-10,400) |
|
With resale value of RM 60,000, balance |
$75,597 |
|
|
Actual
cost of the car to you is :
(price of car - cash balance), which is 27% of the cost of the
new car) |
$28,402 |
$(104,000-75,597) |
| The cost is actually 27% of the price
of the car (28,402/104,000). In this case, the car is not
entirely free but only costs you 27% of the sale price.
With the cash-in hand of $75,597 you could use the same
strategy to buy another new car. |
This strategy, buy a new car with only 27% cost, works because:
- Use full financing at lower interest rate , when you can
get more investment return from your spare money, reduced due to
payment of installment.
Case C: Use full financing. You don't have the spare
money but you have the budget to pay the monthly installment and have
some monthly
saving for investment.
This is the case of those who just enter the workforce or new
business, without much capital or saving in the early years.
We will compute using a new car price of RM 50,000, i.e. less
expensive car, so that car buyers (without capital or saving advantage)
will not over-stress their financial commitment.
It is important that the car buyer, after paying the monthly
installment, he or she must be able to save some money every month and
put into the investment instrument that can generate 10% annual
return. We will work out one example on the quantum of the monthly
saving.
|
New Car price
|
$50,000.00
|
|
|
Max loan 90%
|
$45,000.00
|
|
|
Loan interest |
3.00% |
|
|
Loan Duration |
7 years |
|
|
Monthly
installment
|
$648
|
|
|
Down Payment
|
$5,000
|
|
|
|
|
|
| Monthly saving and Invested
|
$450 |
|
|
Monthly budget $(648+450)=
1098 is a MUST, in this case. |
|
Every month for 7 years, save and invest $ 450. At
the end of 7 years, you get
|
$51,638 |
|
|
Resale value of the car
after 7 years
|
$30,000 |
Assumption |
|
Total cash in hand then |
$81,638 |
$(51,638+30,000) |
At the end of the 7 years, you have cash in hand of about $81.638.
You can then buy another new car around that value with full finaning This is the same as Case A, i.e. the time you can more
or less buy a new car free and make money also.
This strategy, buy a new car with little or no capital with free
car in the future, works because:
- Use full financing at lower interest rate , when you can
get more investment return from your monthly saving.
- Though you have the initial disadvantage of little or no
capital / saving, your monthly forced saving with investment
enables you to buy another new car free and make money 7 years
later.
(I designed a spreadsheet template where you can fix your
monthly commitment for installment and saving, and do some simulation
on your financial planning. For those of you who are interested in the
template, also covering Case A, B and C, you are welcome to get it
from me, by emailing me at andrew@360q.com.
Please introduce yourself)
I hope I have given you some illustration on how to combine
financing and investment strategies to make our money work for us.
There is Good Loan and Bad Loan, the above is a Good Loan case as long
as you can get more % return than the interest charged by the finance
company.
The above principles can be easily applied to purchase of capital
intensive items like properties, not just car.
Now the Big Questions need to be asked:
- What and (how it works) is the investment instrument that gives
10% return?
- Is there risk? or guarantee?
- Is it a consistent return, year after year?
- Does one need to do research, carry out monitoring work on the use of the
investment instrument?
This QuaSyLaTic is glad to bring about such financial and
investment knowledge to the community so that people can have better
financial planning of their live and have better control of their
financial situations also. He not only carries out research and
monitoring on 10% or more return investment instrument, he is also
doing timing to get 50%, 100% or more return.
You can email me at andrew@360q.com
or call h/p 012-6061525, or just read some of the articles or research
paper I made in this website, if you are interested to learn more.
End.
