Finance / loan question
08 March 2002, 09:38 AM
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Can one of the financial wizards here please help me with relative interest rates?
I want to buy a house and a car. House loan is 325k. Car is 30k.
Home interest rate is 4.3%, but 0.2% lower if I can get the Loan to Value down a bit. I did want to pay cash for the car, but if I put the cash into the house, I get the lower LTV. It will be a flexible interest rate, but always 0.2% lower.
That means that I have to get some sort of finance deal for the car though (and I've no idea what's on offer around here). Assume it's a "typical" UK deal (not a good one!).
Can anyone indicate what the difference is, over time, btwn putting the cash into the car or the house, and which is more advisable? I ask for the difference in monetary terms as I might also get some discount off the car price if I pay cash, so it's up to me to factor that in too!
Basically, if it's a few hundred, I'll choose my own route - if it works out at several thousand, I'll listen very carefully!
Many thanks
Brendan
I want to buy a house and a car. House loan is 325k. Car is 30k.
Home interest rate is 4.3%, but 0.2% lower if I can get the Loan to Value down a bit. I did want to pay cash for the car, but if I put the cash into the house, I get the lower LTV. It will be a flexible interest rate, but always 0.2% lower.
That means that I have to get some sort of finance deal for the car though (and I've no idea what's on offer around here). Assume it's a "typical" UK deal (not a good one!).
Can anyone indicate what the difference is, over time, btwn putting the cash into the car or the house, and which is more advisable? I ask for the difference in monetary terms as I might also get some discount off the car price if I pay cash, so it's up to me to factor that in too!
Basically, if it's a few hundred, I'll choose my own route - if it works out at several thousand, I'll listen very carefully!
Many thanks
Brendan
03 August 2002, 10:45 AM
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In simple terms its always better to pay off earlier, especially if you maintain level of payments as interest and repayment decelelerate/accelerate respectively through the life of a loan.
I'd be inclined to keep Motor and house split as their depreciation and appreciation timelines are miles apart. If you stick 30K into your house for a new motor you'll just forget about it and be stuck paying for a car for 30 years when it last only 5 or 6. Only IMHO, however 4ish % is likely to be better than any possible car loan.
Regards
Cammy
[Edited by camk - 3/8/2002 10:47:37 AM]
I'd be inclined to keep Motor and house split as their depreciation and appreciation timelines are miles apart. If you stick 30K into your house for a new motor you'll just forget about it and be stuck paying for a car for 30 years when it last only 5 or 6. Only IMHO, however 4ish % is likely to be better than any possible car loan.
Regards
Cammy
[Edited by camk - 3/8/2002 10:47:37 AM]
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