I am buying a new car and was going to take out loan. Is it better to add to mortgage?
I am all ready for buying a new car and to take out a loan. Someone has told me i would be better off adding to my mortgage. is this true and if so how do i go about it?
- contemplatingLv 51 decade agoFavorite Answer
Depends on what you are sitting on for equity. I would ask at the bank what the rates will be for you first.
If you're under 80%, you can get a HELOC up to 80% and get some pretty good rates (make sure that you won't want another loan for awhile, because it will hurt your credit).
Otherwise it'll probably be cheaper for you to get a car loan.
(This is only speculation, ask your bank(s)).
Currently my HELOC rate would cost slightly less because the HELOCs are tax deductable (up to $100k) and offer more flexibility.
Don't forget that you can always pre-pay your loans. So what these people are saying about it costing you more is only relavant if you are not choosing to pay the same towards your HELOC that you'd be forced to pay on a car payment.
Also, all loans are "front-loaded" because you owe more when you start and you are making consistant payments (so more of it is interest when you start, and as you get it paid down, you owe less...so you pay interest on less).
- Anonymous1 decade ago
It would be wiser to take out a new loan for purchasing the car. Generally the length of a loan for car purchases are 3 to 5 years while mortgages are 15-30. You may pay more in monthly payments with a car loan but, overall, you'll pay less for the car with a separate loan. Mortgage loans are front loaded with interest (meaning your payments for a number of years are mostly interest payments and the reduction of the principal is negligible).
- ScouseLv 71 decade ago
Instinctively I thought the answer to be no.
Your mortgage is over a long period of time and you will only have your car for say three or four years. You will almost certainly owe more on your car than it is actually worth for most if not all of that time
At present the in housing market prices are going down and you will possibly have negative equity in your house,
I do not know about the financial calculations because I do not have the mathematical knowledge to work it out
- frak1a12345Lv 61 decade ago
I think you may have misunderstood your friend. It makes no sense to try to add the cost of the car to your mortgage--none whatsoever! However, you could set up and use a HELOC(Home Equity Line of Credit). It is usually cheaper(lower interest rate) than the standard car loan and can be paid back over a longer period of time though I don't recommend stretching out a car loan for 15 years. The downside, of course, is that you are putting your house up as collateral and could lose it if things go wrong. Do some research an HELOC's and see if they fit your needs.
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- RebeccaLv 44 years ago
Car loans are usually 2 to 5 years. The lender wants the life of the loan to be less than the life of the asset. And you probably want to pay it off and buy a new car before the car dies in about 7 years. And what if you get into financial difficulties? You really do want them to be separate.
- SpannerLv 61 decade ago
Add to a mortgage? Who want`s to be paying for a car 20 years after it has been crushed.
- Florence PLv 61 decade ago
That would be crazy to add a car loan to your mortgage....whatever you buy the car for, you will quad triple that amount by the time you payed your house off. Anyone with one eye and half sense will tell you not to do that. I would hate to know that a $15,000 car would cost me well over $100,000. (don't do it)
- Anonymous1 decade ago
Depends how much you need to borrow.
To add to your mortgage your lender will charge fees you need to factor that into the cost.
How long does your mortgage have to run? Do you want to be paying for a car for that long?
The key factor is what will be the total cost including interest and fees.
- ?Lv 71 decade ago
Do the maths. It isn't.
Get a loan. *Or* if you add it on your mortgage, make sure you put extra into a high interest account so you can repay that extra in say 3 or 4 years.
- 1 decade ago
If you have one those all in one accounts (like the virgin one account) you just write a cheque out for the amount you need. They then add it to what you owe them thus paying the same rate as your mortgage.