How did you finance your brand new car?

[FormulaFG]

I'm trying to figure out how to buy my first brand new car and I'm currently assessing the options available to me. Getting it put on top of the mortgage is looking the most likely option assuming I have enough equity.

The main other option is a car loan but that has a much higher interest rate and it will be a stretch as it is.

[bangm001]

Do you need a brand brand new car? Unless you can claim it back as a company vehicle it doesnt make financial sense. But if you MUST have it then definately try to put it on top of your house loan. Home loan at under 5% vs personal loan at 9ish+%...
I voted above and managed to pay for my car cash, but that was because I had my house rented out and was still at home at the time. Try to save a big chunk of the deposit cash if you can, off setting it on your house loan while you save.

[strobe]

Dunno what your mortgage situation is like, but (say) $50k at 6% over 25 years is about $100k, vs $50k at 12% over 3 years is about $60k. Monthly payments would be massively different, but I guess it depends how much you really want that new car.

Adding to the mortgage looks cheap, but you're paying for it (and some) in the end.

[smoo]

Originally Posted by bangm001

Do you need a brand brand new car? Unless you can claim it back as a company vehicle it doesnt make financial sense. But if you MUST have it then definately try to put it on top of your house loan. Home loan at under 5% vs personal loan at 9ish%...

And how many people fall into the trap and put a 30+ grand car at 5% over 20-30 years vs $30k at 9% over 5 years thinking they're better off...

[bangm001]

True, but thats coz people dont put in ANY extra on the house loan even though they just put a car on top of it! LOL!
People need to be smashing their home loans right now whilst interest rates under under 5 %.

[turboclown]

Buy off a dealer doing a stupidly low rate instead of paying cash and bank the money if you can get a better rate is the way i did my last one. Went with the intention of paying cash, but a 2.9% rate was too good to pass up.

[290GTP]

Cash. It's a depreciating asset, if you can't afford it, don't buy it. Unless its for business purposes.

[SensationFG8]

As soon as we mentioned we were going to redraw on the home loan to pay it the dealer started talking about rates in the 5's.

If you can lock in a fixed rate at 5.2% or something like that over 5 years it's probably best.

We'll most likely go with the dealer finance because it spreads our money across more segments of the economy rather than just giving it to the bank.

[sico]

Only put a car on your home loan if you're desperate mate.
It's not a smart option, as stated previously.

Sent from my C6603 using Tapatalk

[Franco Cozzo]

Both of them with cash, that I saved up from working.

Everything I own is with my own $$$, better that way.

[LG17]

Mine was cold, hard as well.

[Franco Cozzo]

Originally Posted by LG17

Mine was cold, hard as well.

Bet the Mrs is happy

[neptune blue]

As already mentioned paying interest on a depreciating asset isn't a good thing
New cars simply don't hold thier value
A very nice second hand one is the way to go and there are plenty out there
I just brought a immaculate 2009 Caprice fully loaded 70 thousand K on the clock for 18 grand, originally a $70,000 motor car

Unless you can claim it as a business expense or can easily afford it I wouldn't be buying new but at he end of the day its your choice

[minheim]

Only do a mortgage add or redraw if you will increase your payments to match close to what a car loan would otherwise be. The safest way would be to have an automatic deduction paid onto your home loan for the extra amount. One advantage of the mortgage option is you will not pay a higher insurance premium like you would do under finance. As others have said if you let it get paid at the minimum mortgage payment the interest long term will be negate the benefit. If you won't be disciplined for the duration with paying extra then a mortgage option is best avoided. Also be wary of some of the low interest manufacturer promotions as many are based on you paying the full RRP.

[Franco Cozzo]

^ I've done the whole new car thing twice and if you're going to chop and change cars like I do its not worth it.

[JC]

For the GTE I bought last week, I got mine from beyond bank at fixed rate of 7.95% (8.24% comparative for the amount I borrowed, the term etc) for 7 years. It means I will pay $12k interest over the term, but since I got the car for around $15k under market value, I'm calling that a win - but my circumstances are probably the exception since I bought the car for essentially dealer wholesale price.

At the end of the day, you have money, and a life. If a new car is part of what you want, use your money to pay to achieve that. If that means you use it to pay off a loan, then go for it.

I'm great at paying off loans, crap at saving (one may be related to the other though). Our only loans at the moment are the mortgage, and the car loan. No credit card or other debt, all bills always paid on time.

Whatever you decide to do, enjoy the car, and enjoy your life. A life without enjoyment is existence only, not living......

Also, if you do the redraw option (and it is a good one since the interest rate is low at the moment), then work out how much the weekly repayments would be for say a 7 year term, and make those additional payments each week - paying weekly reduces interest overall, not by much, but enough to count when you have a 250k+ loan......

[Smoke Pursuit]

What ever you do don't put a residual on the loan.... Nothing worse then getting 5 years down the track and having to pay 30% at the end.

[Auslandau]

Also ..... if you want a new car and you know you can afford it, do it. Nothing worse than thinking in 20 years time what you should have done and missed out on. If you can do it, good luck to you. Its great negotiating, buying, waiting and finally getting the keys. IMO it's an experience that every car person should experience once in their lives if they get the opportunity to do so. Some don't want or require a new car and that is no probs at all and can totally understand.

Also, as said above, big mistake on the house, all for the reasons already given.

Also having a loan that ends is also a great feeling. Even if you buy a $50,000 car and in 5 years you pay it off. You use the $25.000 (or whatever) when sold and buy a $60,000 car. Pay that one off in 3 years as the repayments are similar because you only paid $40,000 for it and so on.

I know you have paid the interest on it, lost on depreciation but you have used it, paid for it. enjoyed it as long as there are no regrets etc. If the repayments are affordable, done deal.

There are some good deals still out there. I am actually with BMW Finance for the Fords at present.

[P6LTD351]

I will be buying my first new car when the Mustang comes out. I was always against buying a new car, but the Mustang is something special to me. Add to the fact that I have no kids and my wife recently parted ways with me :( . I have no mortgage and savings in the bank. I will be paying for it in cash. I reckon it will be the only time I buy a new car, but I agree, it's an experience that everyone (if they can) should go through at least once in their life.

[JAJH]

Just bought a 'new' FG Mk2 XR6 with 2,000klm, so as close to new as possible. New, they are around $45, I paid $28 from Q Ford Brisbane. I financed it with the dealer through Esanda at what I thought was a pretty competitive interest rate. Strange though, I cant insure it for any less than $43k with Suncorp as that's what they deem it's worth.

1st new car I have bought in about 10 years because of the depreciation, so I thought this was a pretty good deal.

[Kieron]

With extending the mortgage, it's alwasy worth looking at whats currently available and swapping to a new mortgage, just like you wold shop around for the cheapest fuel cost. But while your at it, look for a mortgage offset account too.

You might end up with a cheaper % rate, wrap your new car purchase into the loan and have your salary payed directly into the mortgage offset, this way your money is always working against your mortgage and effectively, your car loan, just have to make sure you don't spend it. Definately need to do the sums on this though.

The other option for a new car of course is a novated lease. You certainly need to do the sums and it depends on what you want to do with the car but it may well be that you want to change cars every 5 years ( I certainly get itchy feet around 5 years), novated lease it for 5 years then re-novate again

[Mulga]

I'll chip in with another scenario........why use say $40k of the cold hard cash or your life savings when you can pick-up 2.9% finance deals. Why would'nt you invest the $40k in a term deposit or better still top up your super. The interest you earn will more than offset the interest paid on the car. It's about individual circumstances, I'm just saying that paying straight out with cash is not always the most logical solution.....it's about the market conditions and cost of money at the time of buying the car.

[747jet]

CASH only here

[FocusLX06]

Personal loans that I Salary Sacrifice here. I make up the cost of the interest in reduced tax anyways, benefits of working for a Not-for-profit.

[LASTXR]

We did the 2.9% finance deal.

XR6 $34.000 drive away no more to pay
10% deposit $3400 & borrowed the rest.
Loan term = 4 years
Total interest = around $950
Thats less then $250 a year

Why would tou pay cash

[black13]

Originally Posted by marv&ro

We did the 2.9% finance deal.

XR6 $34.000 drive away no more to pay
10% deposit $3400 & borrowed the rest.
Loan term = 4 years
Total interest = around $950
Thats less then $250 a year

Why would tou pay cash

cause you own it, you can go **** up in that 4 yr period,

[Auslandau]

.... and if you go **** up in that 4 yr period. then use your cash? But in the meantime use other peoples money to buy things and let your cash work for you.

[buggerlugs]

Cash, If I can't afford it, I don't get it..............

[Nova 8]

Cash.

Personally I don't care how people pay for their car, if you want a new car and can afford to spend the cash or pay a loan then get it. What's 20k over 5-7 years for the enjoyment of owning something you really want. One of my other hobbies is aquarium keeping, it costs me a mint each year and I make no money off it but I enjoy it deeply.

[LASTXR]

Originally Posted by Auslandau

.... and if you go **** up in that 4 yr period. then use your cash? But in the meantime use other peoples money to buy things and let your cash work for you.

Spot on.
My money is working very well for us at the moment