The guide to avoid paying
more for your next car.
new car with
Why you shouldn’t put your car loan on the mortgage
Many home owners don’t think twice about adding the purchase price of a
car or even a holiday to their mortgage, but this is short-term thinking that
can result in long-term problems.
Many home owners believe that using their home equity to purchase a new
car is a great solution because they don’t have to apply for a car loan and their
mortgage repayments often stay the same.
It’s easy to think paying for your new car with a mortgage top up is cheaper
than other car finance options, with home loan interest rates the lowest we’ve
seen in years – there are a few things to consider before you make that call.
The difference – Home loan vs car loan explained
If your new car costs $30,000 and added to the mortgage at 4.99% over a
30 year term. When you take into account compound interest over the term
as opposed to the longest car loan term of 5 years, it can increase your total
payments to over $29,000, even though the interest rate is a lot lower.
Adding a car to your mortgage
simplify.co.nz 0800 001 561
#1 Cars don’t go up in value
Car Cost Home Loan Breakdown
Car Loan Breakdown
$29,234 vs 9.95% $8,866 =
A car is not an appreciating asset unlike
your property, so you will never get the
extra money you pay back.
#2 You’re in debt longer
The loan term really matters to the total
amount you pay and banks want you to
be in debt longer as they earn more.
#3 Additional fees
It’s not always a cost-free option.
Sometimes your bank makes you pay
additional fees and refinance the loan.
#4 Stuck with an aging car.
Home owners feel that they will still be
paying for the car for years after selling
it, so they often do not upgrade.