This is probably one of those things where a number of solutions are available, I'm trying to work out which one is best for me.
Basically I have a deposit for a house of 20% ($100k) and a bank loan for 80%. The thing is I also have (will have by settlement) a further $20k. So that's good, but I need to buy a new car. I now need to work out how to pay for it!
As I see it my options are to put down the 20k ontop of the 20% deposit and reduce my montly repayments and interest over the life of the loan and take out a car loan for 3 or 5 years, or stick to the 20% deposit and just spend the cash on a car (which would also require a further 10k to get the car I want – which is a second hand 'cheap-but-reliable-not-too-old' landcruiser for 4WDing).
The thing is my last car (genuine el-cheapo) has died and I am car-less. So I need to do one or the other, I'm just having trouble working out which one!
I would be grateful for any help on this one!
Further details include: I have capacity to save 20k in about 1 year which would otherwise go onto the offset account, 30K in 2 years (as I will live in the IP for six months as a FHO in accordance with the benefits of a FHOG).
It would probably be best to put all your money in on your property purchase and then once you have the property loan approved, then apply for the car loan.
Car loan companies like that people have property as extra security, Banks don't really like any extra debt that isn't theirs.
It will come down to your servicability so you will need to check that the numbers work, but this is normally the better order to do it in.
If you can claim the car loan (ie self employed or work car of some sort) then that will help with the cash flow.Thanks Anthony,
to the point and good advice.
Why not buy a cheap/reliable car for 2-3K and once you purchased your investment property sort out what you have and what you can spend. Car loan interest rates are much higher then home loan interest.
You can always resell the car and purchase a more expensive car afterwards
I agree with Anthony. It may also be worthwhile considering building up equity as quickly as possible in the property and delaying the car purchase until you have sufficient equity to use a LOC secured against the property to fund the car loan as you’ll obviously be able to access a cheaper interest rate than a car loan will have. Perhaps you could purchase a cheaper car initially to meet your transport needs and then upgrade to the ideal car once that equity has been built up.
It may be worth considering borowing more on the IP and keeping the cash for the car. IP loan would be deductible and lower interest rate than a car loan – which may not be deductible or fully deductible.
And, try to get a cheapy and make your money work for you.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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