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Hello st/personalfinance: Please check that I'm thinking this through correctly.

Posted by ty97 Oct 31 '24, 08:52

There are two options:

Option 1:
- Use all of down payment money for house
- Have car payment

Option 2:
Use most of down payment for hour house, except the money needed for car. Buy car in cash

-----------

In both cases, down payment on house will be at least 20%.

All other things equally, financially it's advantagious to maximum the house down payment and just have a car payment, right? (i.e. Option 1)

Responses:

You CAN afford it. -- nm - Suze O Oct 31, 09:22
can't you guys deduct mortgage interest on your taxes? that would be a huge swing to using cash on the car. -- nm - Beaker 🍺 Oct 31, 09:09 1
- That's why he needs spreadsheets! What's the max mort interest he can/wants/needs to claim, if at all? So many scenarios! -- nm - VMan Oct 31, 09:16
Generally, you want as low a loan for house as possible. That interest adds up more over time than a car loan would/could. - colin Oct 31, 09:03
Time to make a spreadsheet! -- (edited) - znufrii Oct 31, 08:58 2
- Yup. Long term, lower rate (mortgage typ) vs. the short term, higher rate (car typ). Any greater dealer events giving close to 0% for cars? -- nm - VMan Oct 31, 09:05 1
  - Quick area search here shows some Chevys at 0%. Finance the car! Although they typically hit an up front fee for the deal. -- nm - VMan Oct 31, 09:09
Would it depend on respective interest rates? -- nm - Dano Oct 31, 08:54 5
- That's my thought. Also, mortgage interest can be deductible (up to a point). Generally I think mortgage rates are lower. -- nm - pmb Oct 31, 08:56 4
  - Also, the mortgage payment is spread out over a longer period so the payments should be lower for that reason as well. -- nm - pmb Oct 31, 08:57 3
    - But that means more interest paid in total over 30 years vs a 5 year car loan, right? -- nm - ty97 Oct 31, 08:58 2
      - That is a possibility. I think you'd have to do the math more specifically. Also, taking into account the time value of money. More current cash vs - pmb Oct 31, 09:02
      - That’s offset by increasing your free cash flow over that time period due to the lower payment from amortizing over 30 years instead of 5, though -- (edited) - znufrii Oct 31, 09:02

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Hello st/personalfinance: Please check that I'm thinking this through correctly.

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