Buy Toyota stocks and get a free car

I know the title is somewhat of a cliffhanger – so dear reader: Please hang on. I will get to it in the end.

First I would like to explain our current situation. We have decided to move. The 1st of march we move from Denmark’s second biggest city to a smaller (cheaper) town. It is closer to our parents, which is the main reason for the big decision.

The decision has a major impact on our life. We need to sell our current house. We need to find a new home. We need to find daycare and jobs and so on.

I managed to land a new job starting from the 1st of march – perfect timing and great news for us. It even means a slightly better paycheck. But it also means, that I have to drive to work everyday – right now I can ride my bicycle to work, which is cheap and good exercise.

A thirsty Frenchman

My current car is a Citroรซn C5 from 2006. A big french mofo of a car. A big engine and a lot of space for the whole family. We don’t drive a lot and the car didn’t cost much.

But now the situation changed. Due to my new job a thirsty old car is a terrible match with a commute of 22 kilometers each way. I know this sounds like a small commute, but in Denmark it is normal to ride a bike to work – 22 km is too much for me ๐Ÿ™‚

Therefor I have been looking for a replacement car. My choice is a Toyota Auris hybrid. When I visited the dealer I looked at a used car as well as a new car – I would never consider a new car, but then I did the math.

Hybrid loan

Toyota in Denmark has a campaign that offers great deals on car loans on hybrids – the interest is 0,95%!! There are some additional costs, but we qualify to be an elite customer, and the total interest per year adds up to 1,76%. The loan is only offered to customers buying a new car.

The twist

1,76% is a great deal and probably the best loan you can get in Denmark besides the very favorable student loans provided by the government.

A new Toyota Auris costs about 33900 โ‚ฌ. (yes we have crazy prices in Denmark due to our tax system)

So far it sounds like an easy choice. But here is a twist – We have managed to save enough money the last two years, which means we can actually pay the car in cash. That way we save the 1,76% interest. I’m a frugal person, and I would love to save money – especially money to pay for interest – those are the worst.

The but..

But what if there is a way to get a free car instead of paying for it in cash?

I love stocks. I love stocks that pays a steady dividend even more. Guess what? Toyota Motor Company is a dividend paying stock!

Toyota paid it’s stockholders 3,56$ per share in 2017. The current price for a stock is 119,73$

Toyota will strive to continue to pay stable dividends on its common shares aiming at a consolidated dividend payout ratio, defined as dividends per common share divided by net income attributable to Toyota Motor Corporation per common share, of 30%

The math

I have the cash to buy a new Toyota Auris Hybrid (I will probably buy a slightly used car but in this example lets go with the most expensive option).

The price in dollars is 39,0076$ The dealer made a suggestion for a loan, where I pay 20% of this amount in cash and loan the rest at the interest of 1,76 % over 8 years. This means a monthly payment of 368,3$.

That means I would save 368$ per month if I bought the car in cash.

But what if I bought an amount of Toyota stocks equal to the price of a new car minus the down payment for the loan and got the loan with 1,76% interest.

Number of shares

(39000 * 0,8) / 119,73 = 262 shares

The dividend from these shares:

283 * 3,56 = 935$

In Denmark I pay 28% in tax of dividend and would give me

935 * 0,72 = 673 $ per year.

The interest from the loan totals to

0,0176 * (39000*0,8) = 549$ per year

Pros and cons


  • My money gets to work instead of being in the hands of a car dealer in Denmark.
  • The dividends can increase as well as the share price.
  • Unless the company goes bankrupt the stock will keep paying dividend even after the loans is paid


  • There is always a risk of buying a stock – in real life I would of course diversify.
  • I will still need to make payments on the loan in 8 years which amounts to: (39000*0,8) / 12 / 8 = 325 $ per month.
  • The dividends aren’t paid every month but would be dripping around the year.


I am very attracted to the solution of buying stocks equal to the borrowed amount. I believe in stocks in the long term, and I think we have room on the budget for a car loan. I reality, we would not use the dividends to pay the interest but reinvest these to accumulate more stocks and more dividend.

What would you do?