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How do wealthy people who no longer work get auto financing?


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Posted (edited)

I asked Reddit this question, but rather than answers I only got argued with.

 

Let's assume the following scenario:

 

* I am in my 40s and achieved financial independence and early retirement.

* I have $1M+ in stock, $3M in joint real estate, and 6 figures in cash accounts.

* I carry no revolving debt, but have a $1M mortgage on one of the properties.

* I have a 780+ FICO score.

* My spouse works and his/her income pays the day-to-day living expenses, allowing the wealth I accumulated to remain invested and re-invested.

 

I decide I want to purchase a vehicle, having a negotiated price of $80,000. Although I have enough cash on hand to buy the car outright, I would prefer to finance the purchase, at a rate of 2% APR for 48 months, since I can make more money investing that cash than I would spend on interest.

 

* $80,000 financed at 2% APR for 48 months spends $3,309 in interest.

* $80,000 invested in the S&P 500, with an average return of 8%, earns $28,839 in 48 months.

* The extra $25,530 in earnings pay for nearly 1/3 of the car.

 

I can provide whatever statements are needed to document the value of the assets, but since any money those assets generate is re-invested, there doesn't exist an "income" stream from them. Basically, it's not like this is a large retirement account that I'm drawing from monthly to live and could show that as income.

 

The other stipulation is that it cannot be the working spouse that obtains the loan nor co-sign for it. It must be obtainable by the non-working/retired young millionaire.

 

For those of you that work in finance or with personal experience doing this, how do very wealthy people who no longer work obtain financing in this case? Can they still do so with the usually favorable terms that a person with a high FICO usually obtain?

Edited by policebox
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Posted (edited)
4 hours ago, policebox said:

I asked Reddit this question, but rather than answers I only got argued with.

 

Let's assume the following scenario:

 

* I am in my 40s and achieved financial independence and early retirement.

* I have $1M+ in stock, $3M in joint real estate, and 6 figures in cash accounts.

* I carry no revolving debt, but have a $1M mortgage on one of the properties.

* I have a 780+ FICO score.

* My spouse works and his/her income pays the day-to-day living expenses, allowing the wealth I accumulated to remain invested and re-invested.

 

I decide I want to purchase a vehicle, having a negotiated price of $80,000. Although I have enough cash on hand to buy the car outright, I would prefer to finance the purchase, at a rate of 2% APR for 48 months, since I can make more money investing that cash than I would spend on interest.

 

* $80,000 financed at 2% APR for 48 months spends $3,309 in interest.

* $80,000 invested in the S&P 500, with an average return of 8%, earns $28,839 in 48 months.

* The extra $25,530 in earnings pay for nearly 1/3 of the car.

 

I can provide whatever statements are needed to document the value of the assets, but since any money those assets generate is re-invested, there doesn't exist an "income" stream from them. Basically, it's not like this is a large retirement account that I'm drawing from monthly to live and could show that as income.

 

The other stipulation is that it cannot be the working spouse that obtains the loan nor co-sign for it. It must be obtainable by the non-working/retired young millionaire.

 

For those of you that work in finance or with personal experience doing this, how do very wealthy people who no longer work obtain financing in this case? Can they still do so with the usually favorable terms that a person with a high FICO usually obtain?

Don't consider myself "very wealthy" (and have less assets and income than in your example) but last year I purchased a new vehicle with no money down and 1.99% through my credit union. It is a $45k common SUV.  I listed on the application "unemployed". I listed my other income under the "other income" section and they approved the loan. I think that they relied heavily on my tenure as a member and FICO which is 839.

Edited by NoMoreHate
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  • 1 month later...
5 hours ago, direct said:

Once your credit score is 760 or over and your credit report is clean, most lenders auto approve your loan without requiring any proof of income (as long as the auto loan is under $100k).  

^ this

 

I have never been asked for POI when buying a car whether it was by check, loan, or personal favours

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  • 4 weeks later...
On 7/9/2021 at 8:57 AM, cv91915 said:

I know this is about auto financing, but FYI Vespa Financial is a ballbuster with documentation.

Decades ago I had some F&I experience while working at a motorcycle dealer and was surprised to find that the the financing of anything two-wheeled was on a completely different level than a car. A car was considered to be a necessity. A two-wheeled vehicle (even if used to commute to work) was considered recreational, optional, dangerous, etc., and was priced accordingly when financing.

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  • 3 weeks later...
On 8/5/2021 at 4:12 PM, racer7949 said:

Decades ago I had some F&I experience while working at a motorcycle dealer and was surprised to find that the the financing of anything two-wheeled was on a completely different level than a car. A car was considered to be a necessity. A two-wheeled vehicle (even if used to commute to work) was considered recreational, optional, dangerous, etc., and was priced accordingly when financing.

Thanks for the FYI. I'm planning to buy a unnecessary vehicle.

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11 hours ago, BossHog said:

Thanks for the FYI. I'm planning to buy a unnecessary vehicle.

LOL.  I wonder when the four-wheel vehicles cease being a 'necessity.'  I guess that is an advantage to not having financed several of mine...no residue on the reports.  

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