Terry’s Tips on Car buying decisions
I’m 65 retired and just started getting SS. I have an Annuity & an IRA totaling over $400,000. I need to purchase a new (used) car and I was wondering how I can take money from the IRA without paying taxes twice (once on the withdrawal and another when buying the car)? Or should I use my savings ($15,000). I don’t want a monthly car payment and the car I have is more expensive to repair it’s 15 yrs old.
Terry Says
Well, you’re definitely going to have to pay sales tax when you buy the car! Tip: trade in your old one, and reduce the purchase price and thus the sales tax.
And you’ll get the best price if you negotiate and do not finance through the dealer. But make sure that you don’t pay the “little old lady” tax — Whatever price they quote you, say you have an appointment with another dealer and definitely walk out the door. (My son taught me that!) And do get a second price, as it could save you thousands. (But don’t be surprised if they say, wait, I’ll talk to my manager and come up with a better price on the car.)
And they make their money on your trade-in, so start by saying you’re going to pay cash and get the cash price. THEN, and only then, say you might trade in your current vehicle. Another tip: Stand there while they appraise your car; don’t let them take it in the back — where they write a secret code on your spare tire, and the next car dealer knows exactly what they offered! Yes, that happens.
I realize I didn’t answer your question. Maybe take part from savings, and part from your IRA. You definitely need some cash in the bank for emergencies.
