best tips for buying a car in 2015

How a Credit Card Can Save You Big Bucks On A Lexus

As a finance writer, I drive inexpensive cars like a Toyota Prius or a station wagon. So recently, I jumped at the opportunity to visit upstate New York region and try out the new Lexus RC F. This is their premier mid-sized sports coupe that pumps 450 horsepower out of its V8 engine. It’s a little faster than my Prius.

Driving north from Westchester through the picturesque Hudson Valley, it’s easy to look forward to my midlife crisis when I’ll crave a car with an eight-speed paddle shifter and a “torque-vectoring differential.” Yet with a starting price of $62,000, I thought I might put on my personal finance hat and see how savvy shoppers might use a credit card to bring such vehicles a little closer to their price range.

Lexus Pursuits Visa

It turns out there’s a Lexus credit card offered though none other than Lexus Financial Savings Bank. This is unusual, since most other automobile manufacturers prefer to partner with an existing credit card issuer rather than go it alone. Perhaps this route allows them to offer more competitive terms.

For example, the Lexus Pursuits Visa card offers a 3.99 percent introductory APR for six months on new purchases as well as balance transfers, with a 3-percent balance transfer fee. That said, paying interest charges on your credit card is not the way to go when you’re saving up for your dream car — or using any other type of rewards card for that matter.

Instead, I’d advise cardholders to avoid interest charges by paying their balance in full every month and earning rewards at no additional cost. With this card, customers earn 5 points per dollar spent at Lexus dealerships, and 1.5 points per dollar spent elsewhere. Points are then worth 1 cent each towards Lexus service, parts, and accessories, or they can be redeemed for up to 10 percent off the cost of a new Lexus.

How you could do this

So let’s say that you scaled back your ambitions down from the $62,400 RC F with the V8 engine and focused on the $42,795 RC model equipped with a 3.5-liter, six-cylinder power plant producing “only” 314 horsepower.

You’d need to spend about $28,500 on that credit card in order to earn a $4,275 discount on the car, which equates to 10 percent off its sticker price before options.

So out-of-pocket expenses for this vehicle would be around $38,520, which sounds a lot more affordable than $60,000-plus for the top-of-the-line RC F (or at least I hope it does to my wife).

In addition, I’m sure there are some significant savings on gasoline and insurance costs to be realized by choosing the V6 model over the V8, and perhaps even more when Lexus is expected to offer a four-cylinder version of this car with a gas-sipping hybrid engine.

Finally, you might even be able to convince your local dealer to let you to charge some amount of the new purchase or lease to the credit card, and earn five reward points per dollar spent — which you redeem for parts, service, accessories.

Does this make sense?

I could point to travel rewards cards that offer valuable points and miles towards your next vacation, but there are many people who find vacations and other intangible rewards to be a waste compared to the purchase of a luxury automobile. I could also find ways to earn slightly more valuable cash-back rewards. But again, that would be missing the point.

The idea behind cards like the Lexus Pursuits Visa is that cardholders feel like they’re getting a little closer to their dream car every time they use it. And having been up close and personal with the 2015 Lexus RC F for a day, I can tell you this is a very attractive offer indeed.

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