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Finance Discussion: Auto Loan vs Mortgage Loan

Discussion in 'Off Topic' started by ChrgdTeCHick, May 16, 2017.

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  1. ChrgdTeCHick

    ChrgdTeCHick Member

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    Hello everyone,

    Curious on your thoughts on loans and extra payments. (After other savings already in place)

    I am getting a CPO, with a loan and my only other loan is my mortgage. My previous vehicle loan was 0% interest so I just put extra on my mortgage principal, but now my MS loan will be what my mortgage loan is (15 years at 2.5%) and will be paid off before 2040.

    Typically you want to pay more on the loan with a higher interest, but what about when they match? I'm assuming since a vehicle, regardless of which, is a depreciation item, where a home (at least in my case) just continues to increase in value, to car loan makes more sense. Both with a good down payment, so neither will be upside down (specially the home).

    Maybe instead of extra payments, do something else with it? But I'm guessing if I'm paying interest, I should look at paying that off first. Opinions?
     
  2. number12

    number12 Active Member

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    Upside down? That only ever matters if you are going to stop paying for any reason. Even then I don't see how it matters.

    Home loan is tax deductible. Are you factoring that in when you say they are equal?

    Me thinks you are over thinking this. It's simple math.. there's one right answer.
     
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  3. ChrgdTeCHick

    ChrgdTeCHick Member

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    Over thinking? Yes j do that a lot! :) more counting down to me MS delivery and thinking in numbers.

    I forgot about tax deductible on the interest on the mortgage loan. Thwats a big one. Although some years standard deduction ends up being higher then itemizing for me.
     
  4. JHWJR

    JHWJR Member

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    There is a third factor--what else would you do with the money? If you have confidence that you can invest the money and get greater returns than your interest rate, you should consider that too.
     
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  5. number12

    number12 Active Member

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    I thought it was some sort of rule that if you ca not make more than 2.5% on cash you can not buy a $100,000 car.

    I thought I read that somewhere.

    Side note if you want to fit in this rule I will give anyone on this forum 4% on their money in $100k blocks. I want to make sure everyone fits in the rule. No thanks required.
     
  6. SabrToothSqrl

    SabrToothSqrl Active Member

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    My bank offers the ability to tie my car loan to my house... making it tax deductible. (and I can remove the house part any time for a $20 fee)

    Always borrow someone else's money to buy things. Never use your own for anything.

    I just bought $15k worth of stocks using a loan against a car at a tax deductible 2.5%

    As of today (2 months in) I'm up 6.8%

    But... this doesn't work for every one ;). I'm also saving for a speed boat. (not kidding, Formula 292, used, lol).
     
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  7. professionalr

    professionalr Member

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    what's the name of your bank??
     
  8. JHWJR

    JHWJR Member

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    It's all about reasoned investment selection, risk tolerance and time horizons. As for me, I have enough invested in Tesla to, you know, but the Tesla. But, when I can borrow the money at 1.99% to buy the car, I'd rather let my stock investment ride. I fully expect to get more than 1.99% annual return over the life of the loan.
     
  9. SabrToothSqrl

    SabrToothSqrl Active Member

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    #9 SabrToothSqrl, May 17, 2017
    Last edited: May 17, 2017
    PSECU - Homeowner Courtesy Lien

    FWIW, Motif is my favorite investing platform. RobinHood would be, but I get flagged as a day trader and annoyed, and they have NO support system. NONE. you call or email and it's a black hole. They pretty much suck.

    Motif has actual helpful humans.

    Tech Stuff

    currently playing with. All my TSLA stock is in another account. Else I'd have put some TSLA in here too..

    Don't forget, all stock could be worth $0.00 tomorrow. So.. sleep tight.
     
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