Getting a Car Loan Vs Paying Outright

draouht on 17/02/2024 - 20:55

I was after peoples thoughts on my situation and what others would do:

28k in savings

Current car worth 9k, and is at a great point to sell it but the more I drive it gets closer to 200,000kms and the value will drop significantly.

Earn 93k, low expenses lifestyle and save quite quickly.

I've been looking at getting a 4wd for years and its been a goal of mine to get one, for travelling/camping and we purchased a house that we are wanting to reno so the 4wd would make a world of difference for this.

We are currently on a fixed rate mortgage until August and then we are going to look to refinance.

We also are wanting to do renovations which are going to cost $$ but they are mostly cosmetic and nothing substantial in costs, $2-3k projects here and there.

I found a great deal on a Triton, $40k, comes with almost brand new kms and still has new car warranty, and if I was going to get a 4WD it would be this one. Just want to get peoples thoughts on which option I should do:

Option 1: Use $25k of my own cash, borrow $15k from my partner, sell my car, and owe roughly $5k to her / get a small loan (ING variable personal loan) to pay her back.

Option 2: Use $20k of my own cash, get a $20k loan (ING variable person loan), sell my car, and owe $10k to the loan which I essentially throw my money at getting rid of. Keep 8k of my own cash for emergency savings.
Option 3: Wait until August, refinance, have a larger savings amount. However my car value will have depreciated more and the costs of 4WD would continue to go up. And we aren't able to do renos/travel as easily as we could have with a 4WD.

Financial

Comments

  • Eeples on 17/02/2024 - 21:18

    I am unsure if you yourself has $25k in savings. Ask your partner if you do.

    • HeWhoKnows on 18/02/2024 - 08:59

      Unfortunately OB isnt licensed to provide personal financial advise nor on marital affairs.

      This is one only OP can answer as they know thier own finances and personal relationship the best

  • holdenmg on 17/02/2024 - 21:20
    +1

    Usually using your home loan to finance your next car is going to be a cheaper Interest Rate.
    Do the numbers and consider your circumstances.

    • Dollar General on 17/02/2024 - 21:41
      +2

      Depends if you make extra repayments though to make up for borrowing more otherwise you are paying interest over 20 or more years

  • brendanm on 17/02/2024 - 21:22
    -1

    Dunno, but triton wouldn't be my first choice.

    • Dollar General on 17/02/2024 - 21:39
      +7

      But nothin frightens a triton

    • CurlCurl on 17/02/2024 - 21:43
      +1

      A Ranger or Hilux wouldn't be my choice.

      Depending of Triton model you get 2WD, all wheel drive, 4WD high and 4WD low.

      • brendanm on 17/02/2024 - 22:01

        Ranger or Hilux wouldn't be my choice either.

        I'm sure you get those modes, you also have to live with owning a Triton.

        • mapax on 18/02/2024 - 09:10
          +3

          What’s wrong with a triton?
          Obviously it’s a tiny sample but the work fleet has ranger, hilux, and triton, we have about a dozen of each and the tritons have been the most reliable. I can’t recall any of the tritons being off the road for extended periods of time, unlike the others brands.

          • brendanm on 18/02/2024 - 12:12

            @mapax: I just don't like them, 4n15 is a lame engine, Mitsubishi build quality and feel is just below others. Not my cup of tea, YMMV.

            • brad1-8tsi on 19/02/2024 - 13:33
              +2

              @brendanm: Mitsubishi 10 year warranty only applies to retail customers. Fleet purchasers (and a few other discounted buyers) aren't eligible and there are a few 2nd hand buyers getting a rude shock about warranty.

              Mitsubishi service is often pretty rubbish so I'm not sure why anyone would want to commit to that for 10 years.

              I drive a Pajero Sport and while it does everything I need it it to, the 4N15 engine is way underpowered for a 2 tonne vehicle.
              It's also fairly obvious where costs have been cut. The dampers are way under-specced. The fuel tank too small and they are heavy on fuel. Factory intercooler hoses split causing ongoing DPF issues. The air filter inlet is in a very stupid place. The "smart" alternator is dumb. The 3rd row layout is poorly executed. If you don't use the gears the brakes overheat and make a resonating noise. The electric handbrake fails regularly and is poorly designed.

              Mitsubishi tend not to fix things that are common and ongoing problems.

              brendanm: what would you buy?

              • brendanm on 19/02/2024 - 14:23

                @brad1-8tsi: For a dual cab as a recommendation for someone else, a dmax. I'd personally get a dmax or a previous gen V6 Amarok.

                • brad1-8tsi on 19/02/2024 - 16:24
                  +1

                  @brendanm: The superseded, proper non-Ford Amarok has gained a lot of followers. I can't believe that VW chose to partner with Ford for the current model.

                  • brendanm on 19/02/2024 - 17:09
                    -2

                    @brad1-8tsi: Yeah, seemed like a pretty crazy idea to me, especially considering the number of issues there have been with that land rover V6 over the years.

              • CurlCurl on 19/02/2024 - 14:58

                @brad1-8tsi:

                I drive a Pajero Sport and while it does everything I need it it to, the 4N15 engine is way underpowered for a 2 tonne vehicle.
                It's also fairly obvious where costs have been cut. The dampers are way under-specced. The fuel tank too small and they are heavy on fuel. Factory intercooler hoses split causing ongoing DPF issues. The air filter inlet is in a very stupid place. The "smart" alternator is dumb. The 3rd row layout is poorly executed. If you don't use the gears the brakes overheat and make a resonating noise. The electric handbrake fails regularly and is poorly designed.

                Never owned a Sport but have owned two Pajeros. Recently traded the last one in at 360,000km for an Outlander as my 4WD days are over.

                You do realise the sport is based on the Challenger that is based on the Triton that it has a chassis unlike the Pajero which is monocoque.

                What is meant by monocoque chassis?
                1. : a type of construction (as of a fuselage) in which the outer skin carries all or a major part of the stresses. 2. : a type of vehicle construction (as of an automobile) in which the body is integral with the chassis compare space frame, unibody.

                The shocks are designed for comfort as are the OEM on the Pajero.

                Prado fuel tank is only 7 litres more.

                There are worse air inlets on other 4WD's.

                Smart alternators are all the same. DUMB

                Can't comment on the 3rd row layout.

                The gears are there to be used on long hills. (having driven heavy rigid and semi trailers many years ago I still do it)

                Intercooler hose rubs on the timing cover and is a very easy fix.

                Agree the electric handbrake is a problem. I guess you know the Sport comes with a "special" tool to release the handbrake.

                • brad1-8tsi on 19/02/2024 - 16:22
                  +2

                  @CurlCurl:

                  Never owned a Sport but have owned two Pajeros.

                  So you don't really know the Pajero Sport that well…

                  Yes, I know it's based on the Triton which is why I made my comments as it was relevant to the OPs post and brendanm's comments on the 4n15 engine which has never been fitted to the Pajero.

                  I have no idea why you feel you need to rattle on about what a monocoque is. It's irrelevant to the conversation.

                  No, the shocks are rubbish. They lose damping way before 50k km and often leak. They cheap rubbish made to a price.

                  2016 Prado fuel tank 150L. 87L in the main and a 63L sub tank. A Pajero Sport is 68L. I'm calling that an 80l difference. Even without the sub tank it's a 19L difference. Have you ever had a Prado in front of you filling up from empty at Hellsgate Roadhouse? It's a $350 visit. More when you get right out in the sticks.
                  The most I've ever filled is 64L and that's having the fuel warning flashing for the previous 100km somewhere along the Savanah Way. On the highway I get 9.5l/100km at best. 650km between fills is not enough range for the vehicle it is.

                  Worse air inlets than under the mudguard directly over the tyre that kill an air filter in a week of dirt roads?

                  I use the gears but many folk consider Automatics to be automatic and the noisy brakes on a descent is the result.

                  The hose does not rub on the timing cover. If installed poorly it rubs on the power steering pulley. This is not the issue. The IC hoses are of a substandard design and they split longitudinally, some as early as 25,000km.

                  Yes, I know all about the special tool and how it works. Do you not think it odd that MM have such confidence in their equipment design and operation that they supply a special extra long allen key to fix the inevitable failure? All they have done is remove the manual lever and replaced it with an actuator under the drivers seat that is still attached to cables running back to a drum brake that fills with debris and jams.

                  I'm a qualified light vehicle mechanic and mechanical engineer. I do my own maintenance and modifications on my vehicles. I've had this one for 3 years and done a half lap with it and a lot of off-roading. I have a bit of a clue about the shortcomings and good points of the vehicle.

                  • CurlCurl on 19/02/2024 - 18:51
                    -1

                    @brad1-8tsi:

                    I'm a qualified light vehicle mechanic and mechanical engineer. I do my own maintenance and modifications on my vehicles. I've had this one for 3 years and done a half lap with it and a lot of off-roading. I have a bit of a clue about the shortcomings and good points of the vehicle.

                    Seems like you did none or little research.

                    • brad1-8tsi on 19/02/2024 - 19:12
                      +1

                      @CurlCurl: Did plenty of research. The PS was within my budget of <$35k with reasonable kms on it and available at the time.

                      Before I did the 20k km half-lap I upgraded the springs and dampers, fitted silicone IC hoses and ATs. Planned the trip around fuel stops. Took a couple of spare air filters. I simply never use the handbrake.

                      As I said in my original post "it does everything I need it to".

                      • CurlCurl on 19/02/2024 - 20:36
                        -1

                        @brad1-8tsi:

                        Did plenty of research

                        This is a link to the best Mitsubishi message board in the world. It's Aussie based and has members world wide, USA, NZ, Romania, Great Britain, Canada, Saudi Arabia, Chile etc The knowledge is second to none. There is even a Mitsubishi Master Technician on there. Old Jack is the suspension guru.

                        https://www.pajeroforum.com.au/

                        • brad1-8tsi on 19/02/2024 - 20:46

                          @CurlCurl:

                          This is a link to the best Mitsubishi message board in the world.

                          Yes, I'm registered there.

                          I'm not sure what point you are trying to make. Your info regarding the Pajero Sport has been somewhat inaccurate so far.

                          Thanks anyway. Jog on .

          • Hugh G Rection on 18/02/2024 - 17:09

            @mapax: nothing is wrong with it. people get loyal to certain brands. great thing about the triton that no one else has is they have a 10 year warranty. the rest would have no more warranty after like 3 years.
            go with the triton, it is awesome.

            • brendanm on 18/02/2024 - 18:06
              +1

              @Hugh G Rection: I'm not loyal to any brands, I've worked on and driven them all, owned heaps of different vehicles, this is simply based off experience.

              Also, the 10 years warranty only applies if you only ever service it through a Mitsubishi dealer.

              Also again, dmax has 6 year warranty, most of the others have at least 5, not 3 as you've suggested.

  • sumyungguy on 17/02/2024 - 21:31
    +7

    A few things to add to your mix. 1. Unless your car is a Camry being sold to an OzB fanatic, it's likely already fully depreciated; 2. Consider the cost of hiring a Bunnings ute/trailer or GoGet Hiace van for the reno projects; 3. Skip the winter camping season and do an alternative trip to tide you over until August, when you mortgage payments will be somewhat higher.

  • Dollar General on 17/02/2024 - 21:32
    +6

    What does your partner think as this should be a joint decision rather than asking randoms?

    • Benoffie on 17/02/2024 - 22:35
      +4

      Was thinking same. Apparently mortgage and renovation is joint but buying a car is a loan from the Bank of Wife.

      And that's coming from a Wife 🤔🤣

      • draouht on 17/02/2024 - 22:42

        She wants me to get it because it'll be mutually beneficial, hence why she's offered to cover the difference until my current car sells.

      • CheapandUsed on 18/02/2024 - 07:57
        +1

        You see, you get the ute to make the renovations cheaper and easier… And then when it rains and ruins your largest purchase for the renovation you realise a van would have been the better option

        • CurlCurl on 18/02/2024 - 09:31

          ou see, you get the ute to make the renovations cheaper and easier… And then when it rains and ruins your largest purchase for the renovation you realise a van would have been the better option

          ?

        • 2esc on 18/02/2024 - 14:00

          Not many 5 seat 4x4 vans out there that i know of.

        • FimpBARGAIN on 19/02/2024 - 11:05

          Yeah we have done flat pack runs from IKEA watching the skies and looking up where the nearest servo is. Scary stuff when U have half a kitchen on the back!

  • Wiadro on 17/02/2024 - 21:38
    -3

    get a ford ranger

    • CurlCurl on 18/02/2024 - 09:38
      +3

      get a ford ranger

      Best selling vehicle in Australia doesn't mean it's the best vehicle.

      Ford 10-Speed Transmission Class Action Lawsuit. A Ford 10R80 transmission class action lawsuit filed earlier in April alleges that at least five models equipped with 10-speed transmissions experience jerking, harsh shifting, lunging, clunking, hesitation, and sudden loss of power.

      https://www.mycar.com.au/car-advice/common-ford-ranger-probl…

      • smartazz104 on 19/02/2024 - 12:01

        alleges that at least five models equipped with 10-speed transmissions experience jerking, harsh shifting, lunging, clunking, hesitation, and sudden loss of power

        Easy, just avoid those five specific models /s

  • AndyC1 on 17/02/2024 - 22:05
    +5

    Option C save money and keep it until it is uneconomical to keep.

  • mskeggs on 17/02/2024 - 22:18
    +15

    I think you already know the prudent answer.
    You have increased costs coming in August.
    Reduce spending, pay down your mortgage, do your renovations in a way that adds to your property value. Drive the car to death.
    Think of it as the sensible investment you get to tell your kids about in 20 years.
    When you have more disposable income, and you’ve paid off more mortgage, then indulge in a fun car. If you still want a 4wd they will be cheaper, or your fun car might be more sporty.
    If you are feeling like it has been a while since you had a buzz from spending, buy an Xbox or ps5 or whatever and remind yourself you just saved $20k+ in deprecation expenses.

    • holdenmg on 17/02/2024 - 22:26

      Or OP could go to PlanB.
      https://www.ozbargain.com.au/node/459917

    • draouht on 17/02/2024 - 22:46
      +1

      We'll actually be reducing our mortgage when we go to variable because we fixed at a slightly higher rate last year worried rates would jump through the roof. In that year we both got significant promotions, so we'll be better off in August. But I think your point is still valid and probably the option I'll be going with, because it does just make sense.

    • Paccers on 18/02/2024 - 13:28

      +10 if I could.

  • Tee Rex Arms on 17/02/2024 - 23:47

    Seperate bank accounts wtf

    • Eeples on 18/02/2024 - 00:06
      +2

      I actually think separate money is a good thing. (But, lending to each other…. Well good luck with that).

      As long as both realise and understand that as far as anyone else is concerned eg. Banks, government…. They aren’t really separate.

    • pwnd on 19/02/2024 - 12:08

      what's wrong with separate bank accounts? you one of those couples that has a joined facebook profile as well?

      • Tee Rex Arms on 19/02/2024 - 20:43

        There’s a lot wrong with it. And joined Facebook profiles is for when one person has cheated lol

  • altomic on 18/02/2024 - 00:33
    +10

    Option 3 - keep your current car.

    It's not going to "drastically devalue when it hits 200,000". That's nonsense.

  • 87percent on 18/02/2024 - 08:31
    +2

    How would having a 4wd help with Reno? So you can carry materials?

    • FimpBARGAIN on 18/02/2024 - 08:45

      Good point I've had a 2wd Amarok I think any dual cab is next to useless.
      If you don't have kids pick up a single cab is with drop sides.

      I had a freestyle cab Ranger with ladder racks before and it could carry sooo much more than the current Amarok BUT chewed a heap of fuel. You don't need a 3L turbo diesel to carry 1 ton around on paved roads.

      I would also question how good the warranty on the new Triton would be if you aren't the original owner

      • CurlCurl on 18/02/2024 - 10:50
        +2

        I think any dual cab is next to useless.

        For you yes. For others no.

        • FimpBARGAIN on 19/02/2024 - 10:01

          Dont get me wrong, it's great for bikes in the back or a weekend away.
          But in regards to Reno's (which we have been doing for the past 5yrs) you can carry sheets if gyprock or long wooden planks etc.
          With the exception of getting scoops of mulch and gravel you could do almost the same with a station wagon.
          Sedan + good trailer could do significantly more than a dual cab

      • 2esc on 18/02/2024 - 14:09

        In the past ive had utes and we currently have a ute a ford au thats my daily drive to work. Thats the car i plan to get rid of its not practical i always grab the duel cab. If your got mates or family there is room if i need more space i just tow a trailer.

  • 82norm on 18/02/2024 - 10:27
    +3

    Tritons may not be sexy like Rangers or Hiluxes, but they’re reliable workhorses. It will get the job done. Having said that, I think you need to assess for finance and avoid borrowing any money for car. Just keep saving until you have enough.

  • Chewy2221 on 18/02/2024 - 10:28
    +4

    As a general rule, I choose to borrow money against appreciating assets (houses etc) NOT against depreciating assets such as cars. Good luck

  • Drakesy on 18/02/2024 - 11:13
    +4

    If you need a loan you can't afford it ;)

    • CurlCurl on 18/02/2024 - 11:17

      What about a house?

      • Drakesy on 18/02/2024 - 12:42

        House isnt a depreciating asset

        • CurlCurl on 18/02/2024 - 14:04

          I realise that.

          Not everyone can save 40 to 60 or even 10 thousand $$$$$ for a car.

          I've had cars on finance and many hand me down cars. I was 45 before I could buy a good second car for cash. Many years later I have since purchased 3 new and 1 secondhand vehicles for cash.

          Bar far, the vast majority of people in OZ need a car.

          • Drakesy on 18/02/2024 - 14:05

            @CurlCurl: Also a nice rule of thumb is your car should only ever be 20% of your yearly income, anymore and you're spending too much.

            Buying new cars on a loan is a sure fire way to stay poor.

            • CurlCurl on 18/02/2024 - 14:20
              -1

              @Drakesy:

              Also a nice rule of thumb is your car should only ever be 20% of your yearly income, anymore and you're spending too much.

              Oh dear. Who's rule and who's thumb?

              If you are on minium wage $45,902.46 you car should cost no more than $9,160.49 shit box.

              If your income is $100,000 you should buy a $20,000 car.

              • Drakesy on 18/02/2024 - 14:25

                @CurlCurl:

                If you are on minium wage $45,902.46 you car should cost no more than $9,160.49 shit box.

                Yep, nothing wrong with a $9000 car. There's a fair few decent second hand ones out there. Not everyone has to drive a $40k brand new car, the ones that are likely bought them outright.

                I've survived on a $5000 car since uni and have only just graduated to a $30,000 car because guess what, my wage increased.

  • sprocketoctopus on 18/02/2024 - 13:50
    +3

    Put a towbar on your existing car, then buy a cheap trailer. That's what I did when I did Reno's. Then sold trailer.
    Pay off house first.

    YMMV.

    • TotalCombustion on 19/02/2024 - 11:32
      +1

      Probably more usable space than a dual cab too, less runnings costs with current car (I assume). I get the desire to buy a 4wd/ute for trips and such but probably want to look long and hard how often they are actually going to do that and not fall into the lifestyle vehicle trap. Also if worried about depreciation on a 9K vehicle at the end of its depreciation curb that's nothing compared to how a 40K ute will be affected by depreciation (ignoring the last few years of sillyness).

  • 2esc on 18/02/2024 - 14:14
    +2

    Tritons are a very underrated car and one i personally would consider in regards to finances it all about your comfort level.

  • Hugh G Rection on 18/02/2024 - 17:12
    -1

    if your credit sucks finance it to boost your credit score. also pay early and overpay. the more you put early the less you have to pay in interest. if you only pay the minimum every month, your 40k truck will be a 60+k truck when you finish paying all that principal and interest.

    my credit score is amazing already, so i just buy outright because i have the money already.

    • Drakesy on 18/02/2024 - 18:18
      +1

      Thats an expensive way to boost your credit score.

      • Hugh G Rection on 18/02/2024 - 19:13

        when your credit is bad and you don't have enough money, you have no choice.

  • RADICALIST on 19/02/2024 - 11:18
    +3

    Surely $9k car losing value is easier to stomach compared to a $40k Triton losing value over a few years. Also look into a Hilux if you are worried about depreciation

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