Advice on new car purchase

CardinalWolsey

@ComicGeek makes a good point. You should compare the relative cost of funds for each of your options. Depending upon your mortgage rate, it might be cheaper to pay off more of your mortgage and finance the car (e.g. if there was a zero or very low per cent deal going at the dealer). If you have a good rate on your mortgage, it can often be better to spend the cash than pay off the mortgage, as a mortgage can often be the lowest cost way of financing something.

If you're worried about spending that much money on a car though, then don't. Compare the cost of owning outright over a three year period (include the cost of funds when considering something of this value, as well as depreciation) against PCP over that same period. Remember you may get a better deal from the dealer if you go the PCP route as well, so don't forget to consider that in your calculations as well.

lopsyfa

ComicGeek wrote: »

Surely that depends on the relative interest rates. No sense paying off the mortgage on a low interest rate and then paying the car finance on a high interest rate.

If you read my statement, you’ll understand the advantage of my suggestion is having unsecured debt and no secure debt. If the OP were to fall on hard times, God forbids, only the car will be at stake not his house.

It is almost like advising the OP to borrow off his mortgage to buy the car because of relative interest rate.

ComicGeek

lopsyfa wrote: »

If you read my statement, you’ll understand the advantage of my suggestion is having unsecured debt and no secure debt. If the OP were to fall on hard times, God forbids, only the car will be at stake not his house.

It is almost like advising the OP to borrow off his mortgage to buy the car because of relative interest rate.

Doesn't matter how many times you post it, it's still doesn't make sense. If you fall on hard times you sell the car, you're not going to lose the house.

If the mortgage rate is much lower than a loan or PCP finance, then surely that's the sensible thing to do.

lopsyfa

ComicGeek wrote: »

Doesn't matter how many times you post it, it's still doesn't make sense. If you fall on hard times you sell the car, you're not going to lose the house.

If the mortgage rate is much lower than a loan or PCP finance, then surely that's the sensible thing to do.

Refresh on my phone made the second post - no need to be rude. There is no point explaining it to you if you don't understand that owning your house outright and car finance is better than owning a car outright with a higher mortgage if you fall on hard time.

ComicGeek

lopsyfa wrote: »

Refresh on my phone made the second post - no need to be rude. There is no point explaining it to you if you don't understand that owning your house outright and car finance is better than owning a car outright with a higher mortgage if you fall on hard time.

And paying more on PCP finance than on any other finance makes sense because????? Sometimes it really isn't the best financial option to pay off the mortgage too quickly, take some time to read the pensions board on here to understand why.

lopsyfa

ComicGeek wrote: »

And paying more on PCP finance than on any other finance makes sense because????? Sometimes it really isn't the best financial option to pay off the mortgage too quickly, take some time to read the pensions board on here to understand why.

It depends on what you want to achieve. If you define better as paying the minimum interest, you may as well be right.

My original post gave the option I'll take if I were the OP - you may not like it but that is what I think is the better option. For example, if you sell the 32k car, you will be very lucky to get 26k back leaving a shortfall more than the interest you are trying to save in the first place. Plus you have the option to voluntarily terminate you car finance but I guess you won't want to voluntarily terminate your mortgage.

But I do understand the Mathematics but everything is not about Maths and APR. That is why the OP has come to ask the question for other opinions.

I am not trying to pick an argument with you but please respect there is no single best option. I have simply pointed to an alternative option for the OP. Have a great night.