Cash or Finance for My Car Purchase

Mentallysick on 15/09/2020 - 08:40
Last edited 15/09/2020 - 08:40

I am buying a car worth 50K. I have 30K in savings. I am planning to put my 20K into car and finance 30K.
Why does most of the people say that i should finance the whole 50K. I am not investing my 30k anywhere. It pretty much is just sitting on my offset account.
Also Shall i finance the loan from home loan for next 30 years, from home loan but separate car loan for 5 years or get a seperate car loan from dealer.

After doing my homework, I am planning to put 20k savings into loan and finance 30k from home loan (not sure if my homework is correct)

Please give your honest opinion on my situation.

Automotive

Comments

  • hatchbackracehorse on 15/09/2020 - 08:55
    +1

    Without knowing your specifics, the secured loan with a deposit will likely get you a better interest rate compared to a secured loan for the total value of the car.

  • vinni9284 on 15/09/2020 - 09:00
    +2

    You have mentioned a car dealer so regarding to buying the car, they get kick backs for finance so get a loan from the car yard however check if the loan can be paid off immediately without incurring any fees (or very minimal).
    Then get a proper home loan from a Bank that has lower comparison rate and pay off the car yard finance.

    Why? Because the car yard will discount the car more for you as they know that they are getting kick backs from lenders.
    What ever you do, don't fall for their merchandising bull, with paint and tyre protection insurance rubbish.

    • What is rrp on 19/11/2020 - 11:06

      hey, its marko from whiteboard finance

      • vinni9284 on 19/11/2020 - 13:28
        +1

        Lol. Yes! Marko here! I define to my students What is rrp and ensure that they don't purchase for that exorbitant price

        • What is rrp on 19/11/2020 - 13:53

          Aussie Marko - your service is appreciated

          • vinni9284 on 19/11/2020 - 13:58
            +1

            @What is rrp: You're welcome! Let me know if I can help you with anything else!

  • oscargamer on 15/09/2020 - 09:10

    If your savings are sitting in an offset account, what is the interest rate of the mortgage?

  • Muzeeb on 15/09/2020 - 09:11
    +14

    I am not investing my 30k anywhere.

    With a few exceptions, cars are not investments.

    Please give your honest opinion on my situation.

    Sure. If I was you, and happy to use the 30k, then I would just buy a 30k car. Some great, already depreciated cars with heaps of warranty left, in that price bracket.

    What car are you looking at?

    • wiipantz on 15/09/2020 - 09:52

      This is the best response thus far, also asking the right question.
      So OP, what is this high yield investment you are looking to lock yourself into?

    • bdl on 15/09/2020 - 09:53
      +1

      This. OP, why TF you borrowing when you don't need to?!

      • Mentallysick on 15/09/2020 - 10:17

        so you think use my 20K savings as deposit and just borrow 30K?

    • Mentallysick on 15/09/2020 - 10:18
      +1

      so what you are saying is buy a 30K car and pay cash for it?

      • Muzeeb on 15/09/2020 - 10:19
        +1

        Yes. Sorry I was not clear about that.

        What car are you looking at buying?

        Please don't answer if it's a base model Euro.

        • pegaxs on 15/09/2020 - 10:23
          +1

          $30k in savings and wants to blow another $20k on top… my money is on "Mustang"

  • whooah1979 on 15/09/2020 - 09:16
    +2

    buying a car worth 50K.

    Why would anyone buy a vehicle when they can by the stock and see it pump by 12.50% in one day? Get a $7k Corolla and invest $20k in high yield stocks.

    • Muzeeb on 15/09/2020 - 09:24

      In 12 months time…..

      Car - worth about $5000
      High yield stocks - $?????

      • whooah1979 on 15/09/2020 - 09:25

        Anyone that holds it without taking profits is doing it wrong.

        • md333 on 16/09/2020 - 01:05

          Maybe he is buying the car with the profits he's taken.

  • Caped Baldy on 15/09/2020 - 09:52
    +1

    Did you end up buying a bike or scooter or motorbike?

    https://www.ozbargain.com.au/node/548511
    https://www.ozbargain.com.au/node/485847
    https://www.ozbargain.com.au/node/497372

    You seem indecisive, I'd recommend getting a cheaper used fun car.

    • Mentallysick on 15/09/2020 - 10:13

      Yes I did get a bike. Famosa 3K

  • dust on 15/09/2020 - 09:52
    +10

    Neither option. Buy a car for $30k instead. (Or better yet $20k.)

    • plmko on 15/09/2020 - 10:26
      +5

      Or buy that $50k car at the used car dealer for $30k.

      • 0FoxGiven on 15/09/2020 - 22:45
        +1

        The new Rav4? Ye not gonna happen

  • dirtybigbjelke on 15/09/2020 - 10:03

    We need to know the interest rate of the Car Finance and the Mortage. If you can finance the car at a lower rate than the Mortgage you may be better off financing the whole amount and keeping your offset money. Are you a good saver?

    • Mentallysick on 15/09/2020 - 10:15

      Car finance at 6ish% while home loan at 2.89% variable.
      Yes i am good at saving money. My main concern is shall i get 50K loan or 30K with putting my 20K deposit.

  • onetwothreefour on 15/09/2020 - 10:29
    +12

    If you only have $30k in savings do not buy a $50k car.

  • dasher86 on 15/09/2020 - 10:58

    If you plan on using your offset make sure you up your repayments or you'll end up paying more interest over the life of the loan.

  • Bid Sniper on 15/09/2020 - 11:15

    Do 50K cars come with 4 wheels and 30K with 3 wheels?

  • Mentallysick on 15/09/2020 - 11:23

    Thank you for commenting all. At the moment, I am looking the answer for Shall i use my cash to buy car and get loan for the difference or get the loan for the whole 50K leaving the savings into offset. I understand people do not like the idea of buying 50K brand new car.

    • p1 ama on 15/09/2020 - 12:22
      +1

      I am looking the answer for Shall i use my cash to buy car and get loan for the difference or get the loan for the whole 50K leaving the savings into offset.

      By offset, do you mean a home loan offset? That's crazy. Why would you pay >6% interest to save 2.6% interest?

      • andresampras on 15/09/2020 - 12:39

        yeah I don't really understand the question. Of the OP's two options, 30k cash + remainder on 6% finance will cost less overall than 50k loan @ 6%

        Is there a question behind the question?

  • netjock on 15/09/2020 - 11:39

    Home loan <3% interest

    Car loans >6% unless there is some cheap factory financing going

    Cash 1% interest

    Pick your poison.

  • blutek on 15/09/2020 - 13:14
    +3

    negotiate a new Camry for $30k.

    • bdl on 15/09/2020 - 20:20

      And a lift kit

  • Ughhh on 15/09/2020 - 18:24

    Why does most of the people say that i should finance the whole 50K.

    Who says that? Never heard or seen comments online advising that. Though I would imagine the dealerships would rather you finance the whole thing for extra commission.

    Easy question to answer really, if you want to pay less overall.

  • Jono05 on 16/09/2020 - 03:20
    +3

    Whatever you do don’t get finance from the dealer. Draw off your home loan (lower interest plus you can pay it off quicker). If you get finance the finance company owns your car and you pay a higher insurance premium. With a bank loan you own the car. If you’re good at saving money like you say pay at least $25k cash and increase your repayments to pay off the ‘car loan’ quicker.

  • backpaqer on 16/09/2020 - 09:29

    Look into novated leases.

  • OzHunterNSW on 16/09/2020 - 12:42

    Up to you…. full finance allows you to retain your 30k for other toys.
    or part finance will see you forfeit the 30k, yet still be paying a relatively large and long term loan.

  • Willco88 on 04/10/2020 - 00:19

    Finance if you're guaranteed to have a job long term and if you don't mind paying 30% interest above market value

  • yellowfever on 11/02/2021 - 17:16

    What did you end up doing OP?

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