Cash or Finance for My Car Purchase

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.

Comments

  • +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.

  • +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.

    • hey, its marko from whiteboard finance

      • +1

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

        • Aussie Marko - your service is appreciated

          • +1

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

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

  • +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?

    • 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?

    • +1

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

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

    • +1

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

      • +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.

        • +1

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

  • +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.

    • In 12 months time…..

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

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

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

  • +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.

    • Yes I did get a bike. Famosa 3K

  • +10

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

    • +5

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

      • +1

        The new Rav4? Ye not gonna happen

  • 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?

    • 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.

  • +12

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

  • 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.

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

  • 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.

    • +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?

      • 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?

  • Home loan <3% interest

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

    Cash 1% interest

    Pick your poison.

  • +3

    negotiate a new Camry for $30k.

    • And a lift kit

  • 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.

  • +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.

  • Look into novated leases.

  • 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.

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

  • What did you end up doing OP?

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