Finance advice: paying off car vs paying off house bond - Page 2





Page 2 of 4 FirstFirst 1 2 3 4 LastLast
Results 21 to 40 of 72
  1. #21
    Join Date
    Jan 2010
    Location
    Pretoria
    Age
    50
    Posts
    8,229
    Thanked: 3098

    Default Re: Finance advice: paying off car vs paying off house bond

    Quote Originally Posted by stephenplumb View Post
    ..... For me, I would pay off the car, buy the house, use the car repayments to reduce your house debt as fast as you can, and then if you need a new car at some point, finance it through your access bond. I will never go near vehicle finance again!

    The key point here, and it sounds like you are savy, is not to buy a car and then pay it off over 20 years when you have put it onto your access mortgage. You need to pay the same amount into your bond as if you were financing it over 3-4 years, but you will benefit from a better interest rate and also have access to your money if you need it, which is not the case with vehicle finance typically.
    Yes!
    2018 Toyota Fortuner 2.8 GD-6 4x4 AT
    BushLapa 78 Now a Boskruier but with the same Zambia and CKGR bush stripes


  2. The Following 3 Users Say Thank You to lekhubu943 For This Useful Post:


  3. #22
    Join Date
    Oct 2011
    Location
    Earth
    Age
    40
    Posts
    2,627
    Thanked: 1790

    Default Re: Finance advice: paying off car vs paying off house bond

    Ok personally another thing you must consider
    If you can place a large deposit on your house you want to buy then it makes it easier to get a proper loan

    On a proper loan you can get one where you can at certain times lock the interest rate down


    Now say 2 years from now our current magnificent government keeps buggering things

    And our interest rate starts to climb
    You would then have had the chance to lock your interest rate pretty much where it is
    So you keep paying say 12% but the interest rate goes through the roof and hits 23.5% or higher beating the current SA record

    Also as stated going both ways also works well
    it depends on amount you owe on the car but try and insure that you will be able to again buy a another car with the money you save if you stop paying your car now
    2007 Subaru Forester 2.5XT
    Forester nutter here so watch out

    Please remember that I think I'm funny
    (most people don't agree)
    thus take 90% of what I post with 2 pinches of salt

  4. The Following User Says Thank You to Veneficus For This Useful Post:


  5. #23
    Join Date
    Jan 2012
    Location
    Bethlehem
    Age
    52
    Posts
    7,144
    Thanked: 2876

    Default Re: Finance advice: paying off car vs paying off house bond

    Settle the car and pay that instalment that you saved into the Bond.
    "Everything You See, I Owe to Spaghetti" (Sophia Loren)

  6. The Following 4 Users Say Thank You to Petri Oosthuizen For This Useful Post:


  7. #24
    Join Date
    Mar 2008
    Location
    De Wildt
    Age
    56
    Posts
    34,100
    Thanked: 9331

    Default Re: Finance advice: paying off car vs paying off house bond

    Quote Originally Posted by Petri Oosthuizen View Post
    Settle the car and pay that instalment that you saved into the Bond.
    are you sure you're unbiased?
    2012 Jeep Sahara Unlimited 3.6 V6
    Percivamus

  8. #25
    Join Date
    Jan 2014
    Location
    Ezulwini Eswatini
    Posts
    1,456
    Thanked: 1464

    Default Re: Finance advice: paying off car vs paying off house bond

    Sounds like the money is burning a hole in your pocket. and you feel the need to do something with it. which is normal

    have you found the right house yet ? and what price range ? because buying a house is expensive, Im talking about the on costs like lawyers, transfer fees and all other bits that add up quickly to half a bar. These cost we normally resolved within a couple of years by the appreciating value of the property. This is not the case lately and house price growth is below inflation for the past 10 years.

    either way, whether you pay of the car ( is the car sellable at 400k) or buy a house, you will degrade the value of your R 800k in the short term.

    2011 VW Touareg V.8 TDI
    2006 VW Touareg 3.0 TDi air suspension aka Pumba ( sold)
    2003 Pajero IO 2.0 aka Bosvark

  9. The Following User Says Thank You to Karol For This Useful Post:


  10. #26
    Join Date
    Apr 2014
    Location
    Roodepoort
    Age
    62
    Posts
    1,039
    Thanked: 2489

    Default Re: Finance advice: paying off car vs paying off house bond

    Buying a house is not cheap but cheaper in long term than renting. If I remember it correctly change over day is at 5 years after buying.

    When buying the first time it is important to try to time it. Buy when prices are high is a killer. I saw this quite a long time ago around us. Bond values far exceeded the selling prices. Buy when the prices are low is good. When selling and buying timing is not so critical as long as both transactions are in the same housing segment.

    After talking few agents to sell a small town house is very easy. To sell a house closer to R2 milj on our area is difficult if not sold well under real value. There are "fire sales" like two houses across the street from us. Both went well below. One is "renovator's dream". Limit what is difficult to sell depends on the area.

    OP is a first time buyer. I would still settle the car and start looking a place to buy and look for place under valued for the location. Pay off the bond in 15 years or less.

    Quote Originally Posted by Karol View Post
    Sounds like the money is burning a hole in your pocket. and you feel the need to do something with it. which is normal

    have you found the right house yet ? and what price range ? because buying a house is expensive, Im talking about the on costs like lawyers, transfer fees and all other bits that add up quickly to half a bar. These cost we normally resolved within a couple of years by the appreciating value of the property. This is not the case lately and house price growth is below inflation for the past 10 years.

    either way, whether you pay of the car ( is the car sellable at 400k) or buy a house, you will degrade the value of your R 800k in the short term.
    Jouko
    ----------
    2003 Grand Cherokee 4.7l
    2012 Smart
    Never drive a normal car

  11. The Following User Says Thank You to Jouko For This Useful Post:


  12. #27
    Join Date
    Jun 2009
    Location
    Barberton
    Age
    61
    Posts
    5,576
    Thanked: 894

    Default Re: Finance advice: paying off car vs paying off house bond

    Surely the interest rate difference between the two deals should play a major role in deciding where to put it.
    If no significant difference, then consider getting an access type house bond on the full amount and then put your cash into that. You'll get the best interest benefit that way and still have access to the money.

  13. The Following User Says Thank You to RoelfleRoux For This Useful Post:


  14. #28
    Join Date
    May 2015
    Location
    Pretoria
    Age
    40
    Posts
    121
    Thanked: 67

    Default Re: Finance advice: paying off car vs paying off house bond

    Not advice but this is my way of seeing it.

    One thing to think about when you settle that car is that cashflow is easily absorbed somewhere else if you are not super disciplined or when inflation exceeds your increases or whatever the case is. Then you get to a point 3-4 years down the line, your ex car repayment now absorbed but you need a new car but don't have the cash flow to finance. For this reason I prefer to finance my primary vehicle and to dump whatever extra cash I have into my bond. My bond repayment started at X, is now at 40% of X and I still pay X times 2 every month. Now the capital reduction is starting to gain real momentum
    Last edited by Dwerg; 2019/07/17 at 12:19 PM.

  15. The Following User Says Thank You to Dwerg For This Useful Post:


  16. #29
    Join Date
    Jan 2014
    Location
    Ezulwini Eswatini
    Posts
    1,456
    Thanked: 1464

    Default Re: Finance advice: paying off car vs paying off house bond

    Quote Originally Posted by Veneficus View Post
    Ok personally another thing you must consider
    If you can place a large deposit on your house you want to buy then it makes it easier to get a proper loan

    On a proper loan you can get one where you can at certain times lock the interest rate down


    Now say 2 years from now our current magnificent government keeps buggering things

    And our interest rate starts to climb
    You would then have had the chance to lock your interest rate pretty much where it is
    So you keep paying say 12% but the interest rate goes through the roof and hits 23.5% or higher beating the current SA record


    Also as stated going both ways also works well
    it depends on amount you owe on the car but try and insure that you will be able to again buy a another car with the money you save if you stop paying your car now
    Call me a pessimist, but from what I read and hear the current government's ideology will indeed keep buggering things up slowly but surely

    So if you had R800k sitting currently in a 8% PA call account, two years from now it will be work around R 933K.

    lets say the very possible case scenario of back to 23.5% interest rates, your R 933k would be in a position to earn R 200k in interest P/A

    2011 VW Touareg V.8 TDI
    2006 VW Touareg 3.0 TDi air suspension aka Pumba ( sold)
    2003 Pajero IO 2.0 aka Bosvark

  17. The Following 2 Users Say Thank You to Karol For This Useful Post:


  18. #30
    Join Date
    Jun 2017
    Location
    st lucia
    Age
    40
    Posts
    173
    Thanked: 71

    Default Re: Finance advice: paying off car vs paying off house bond

    you are paying more interest on the car than the money in the bank (interest) is making you ?

  19. The Following User Says Thank You to vidalbum For This Useful Post:


  20. #31
    Join Date
    Aug 2013
    Location
    Cape Winelands
    Age
    40
    Posts
    827
    Thanked: 247

    Angry Re: Finance advice: paying off car vs paying off house bond

    Quote Originally Posted by Karol View Post
    Call me a pessimist, but from what I read and hear the current government's ideology will indeed keep buggering things up slowly but surely

    So if you had R800k sitting currently in a 8% PA call account, two years from now it will be work around R 933K.

    lets say the very possible case scenario of back to 23.5% interest rates, your R 933k would be in a position to earn R 200k in interest P/A
    mmm ANC & Unions are calling for interest rate cuts and we will probably see one tomorrow..

    Instead of hiking the rate that will favour the Zar/$, you will see the ZAR devalued more & everything else increase, but low interest rates & inflation figures to keep the politicians happy
    2004 Ranger 4000 V6 Auto (Weekender & Heavy loads)
    2011 BMW X1 Auto (My Mommy-Wagon)
    2011 CashCow 1.6 (Swambo)

  21. The Following User Says Thank You to Kamakazi For This Useful Post:


  22. #32
    Join Date
    Oct 2011
    Location
    Earth
    Age
    40
    Posts
    2,627
    Thanked: 1790

    Default Re: Finance advice: paying off car vs paying off house bond

    Quote Originally Posted by Karol View Post
    Call me a pessimist, but from what I read and hear the current government's ideology will indeed keep buggering things up slowly but surely

    So if you had R800k sitting currently in a 8% PA call account, two years from now it will be work around R 933K.

    lets say the very possible case scenario of back to 23.5% interest rates, your R 933k would be in a position to earn R 200k in interest P/A
    Hmmm that is a good point

    Maybe he should take the R800K and invest it out of SA
    That way he could end up making more and if SA goes down the tube he would not lose it
    2007 Subaru Forester 2.5XT
    Forester nutter here so watch out

    Please remember that I think I'm funny
    (most people don't agree)
    thus take 90% of what I post with 2 pinches of salt

  23. The Following User Says Thank You to Veneficus For This Useful Post:


  24. #33
    Join Date
    Nov 2012
    Location
    Alberton
    Age
    30
    Posts
    175
    Thanked: 136

    Default Re: Finance advice: paying off car vs paying off house bond

    Okay so i did some calculations for you. This is just a rough guide with indicative figures and is not financial advice in any form thereof.

    Variables -

    House value 1.5mil over 20 years purchased as Transfer.
    Car value 400k over 5 years

    Scenario 1 - Pay lump sum as deposit when financing property. Keep paying VAF.

    Bond Costs @ R80 000 (Calculated at 800k = 1.5m - 700k)
    Bond Repayment - R7700
    Saving Long term - 1.7m
    New Loan term 6 years

    VAF - R400 000 @ 5 years @13% - 110 000 interest
    Repayment = R9000

    Total montly expenditure = R16 700 for 5 years thereafter R7700 if VAF is not re-einvested in bond or re-occured.

    Scenario 2 - Pay Partial deposit and early settlement of VAF.
    Bond Costs @ R85 000 (Calculated at 1.1m = 1.5m - 300k)
    Bond Repayment - R10 000
    Saving Long term house = 1.35m
    New loan term 11 years.
    Saving long term VAF = 110 000

    Total monthly expenditure = R10 000 for 11 years if VAF does not re-occur.

    If you can stick the 9000 in the bond too it will be done in 6 years saving 1.6m + vaf 110 000.

    Now if we are honest with each other here the truth is in 4-5 years you will want a new car again. Lets just say its the same price. Your savings on the house stay 1.7bar.
    but say you do take the remaining 9000 VAF after 5 years and look at the amortization of the property at 850 000 after 5 years the outstanding balance is 180 000. Add your VAF payment of 9000 for the remaining year and your house is paid up in 5.5 years as well as your vehicle.

    If you settle the vehicle and add 300 000 as deposit and 9000 extra bond for the period of 6 years and your vehicle and house will be paid off with a saving of 1.7.

    Do yourself a favor and go speak to a good financial guy at any one of the big banks. But look for someone who wants to help because it wont be making the bank any money.

    I know which option makes sense to me because i know if i have 9000 extra in my pocket it wont be going into the bong every month. For you it might be different.
    A journey is a person in itself; no two are alike. And all plans, safeguards, policing, and coercion are fruitless. We find that after years of struggle that we do not take a trip; a trip takes us.
    John Steinbeck

  25. The Following User Says Thank You to Wessel_JHB For This Useful Post:


  26. #34
    Join Date
    Mar 2016
    Location
    Louwsburg
    Age
    36
    Posts
    369
    Thanked: 130

    Default Re: Finance advice: paying off car vs paying off house bond

    So my situation is this: we currently live in a remote area far from town, in an employer supplied house. This has forced us to home school our 3 kids (all in primary school). Which we were fine with, but neither my wife nor I are teachers so it is not easy. Now after 5 years, we feel it is time to move to town and get kids in a proper school. And no, putting them in a "koshuis" is not an option for me whilst they are this young. To complicate things a bit more, we now also have to look after my ailing mother, so moving to town to be closer to Dr's and hospitals make sense. In our local town it is definitely a buyers market at the moment. House prices are really low, and some have dropped prices drastically just to eventually get rid of them. The outlook for the town (and the country as a whole I suppose) isn't great, so one could argue buying a house there will result in depreciating capital. But this is our only option. Either that, or stay in the bush and keep on homeschooling
    2017 Mitsubishi Triton D/C 2.4 manual 4x4
    2004 Honda Jazz (wife's platkar)
    1998 Mitsubishi Pajero SWB 3.0 V6 - SOLD
    2017 Ford Ranger XLS Auto 4x4 D/C - SOLD
    2014 Mitsubishi Triton 2.5 DiD D/C - SOLD

  27. #35
    Join Date
    Nov 2012
    Location
    Alberton
    Age
    30
    Posts
    175
    Thanked: 136

    Default Re: Finance advice: paying off car vs paying off house bond

    Quote Originally Posted by Leeubok View Post
    So my situation is this: we currently live in a remote area far from town, in an employer supplied house. This has forced us to home school our 3 kids (all in primary school). Which we were fine with, but neither my wife nor I are teachers so it is not easy. Now after 5 years, we feel it is time to move to town and get kids in a proper school. And no, putting them in a "koshuis" is not an option for me whilst they are this young. To complicate things a bit more, we now also have to look after my ailing mother, so moving to town to be closer to Dr's and hospitals make sense. In our local town it is definitely a buyers market at the moment. House prices are really low, and some have dropped prices drastically just to eventually get rid of them. The outlook for the town (and the country as a whole I suppose) isn't great, so one could argue buying a house there will result in depreciating capital. But this is our only option. Either that, or stay in the bush and keep on homeschooling

    There is an article i read once with a title of "rent to get rich"

    Do some calculations with rental properties if that is an option. Im not sure how viable it is but from what i read it was along the lines of buying where there is a future and renting where there is not
    A journey is a person in itself; no two are alike. And all plans, safeguards, policing, and coercion are fruitless. We find that after years of struggle that we do not take a trip; a trip takes us.
    John Steinbeck

  28. The Following 2 Users Say Thank You to Wessel_JHB For This Useful Post:


  29. #36
    Join Date
    Oct 2011
    Location
    Earth
    Age
    40
    Posts
    2,627
    Thanked: 1790

    Default Re: Finance advice: paying off car vs paying off house bond

    Quote Originally Posted by Wessel_JHB View Post
    There is an article i read once with a title of "rent to get rich"

    Do some calculations with rental properties if that is an option. Im not sure how viable it is but from what i read it was along the lines of buying where there is a future and renting where there is not
    I have also heard that there is some claims that renting currently would allow you to save more money

    But I have been looking around and the majority of places is these days asking almost the same amount to rent a place than it would cost you to buy it

    So I would love to see where the massive savings come in since then all the money is gone afterwards
    2007 Subaru Forester 2.5XT
    Forester nutter here so watch out

    Please remember that I think I'm funny
    (most people don't agree)
    thus take 90% of what I post with 2 pinches of salt

  30. The Following User Says Thank You to Veneficus For This Useful Post:


  31. #37
    Join Date
    Feb 2009
    Location
    Benoni
    Age
    43
    Posts
    4,240
    Thanked: 545

    Default Re: Finance advice: paying off car vs paying off house bond

    Pay the car in full, maintain and drive it as long as possible. Buy the cheapest reasonable place in the best part of the town, maintain it yourself as best possible without spending big on renovations.

    Car payment must go into the bond, an access bond at that, when it's time for a new car in 10 years time, buy a reasonable used one cash or as close to fully paid as possible. Your own effort to maintain and look after your house and car will make all the difference long term.
    2007 Touareg 3.0 V6 TDI (Facelift, Air, Rear Diff Lock, Rear Mounted Spare)
    2008 Audi A4 B8 2.0 TDI (Multitronic)
    2009 KTM 990 Adventure (Weekend Fun)
    2012 Imagine Trailvan 4-Sleeper

    * consumption needs to be seen in the context that the vehicle is towing an Imagine Trailvan 30% of the time


  32. The Following 2 Users Say Thank You to Kortgat For This Useful Post:


  33. #38
    Join Date
    Jan 2012
    Location
    Bethlehem
    Age
    52
    Posts
    7,144
    Thanked: 2876

    Default Re: Finance advice: paying off car vs paying off house bond

    I'd just suggest not to tie up all your cash into a Bond for the sake of "ek het geen skuld".

    You can rent, but rent escalates, so does (the right) property........... that 1 Bar house you wanted to buy now will cost you more in 2 years' time.

    Everything escalates.

    That blikkie Koo Beans in your kombuis that cost you R 10 will cost you R 12 next year. 20% return. I'm serious here.
    "Everything You See, I Owe to Spaghetti" (Sophia Loren)

  34. The Following User Says Thank You to Petri Oosthuizen For This Useful Post:


  35. #39
    Join Date
    Jan 2012
    Location
    Bethlehem
    Age
    52
    Posts
    7,144
    Thanked: 2876

    Default Re: Finance advice: paying off car vs paying off house bond

    Quote Originally Posted by Kortgat View Post
    Pay the car in full, maintain and drive it as long as possible. Buy the cheapest reasonable place in the best part of the town, maintain it yourself as best possible without spending big on renovations.

    Car payment must go into the bond, an access bond at that, when it's time for a new car in 10 years time, buy a reasonable used one cash or as close to fully paid as possible. Your own effort to maintain and look after your house and car will make all the difference long term.
    x 1000............buy the small house wedged in between your neighbours' big villas. You're the clever one, they're not.
    "Everything You See, I Owe to Spaghetti" (Sophia Loren)

  36. #40
    Join Date
    Mar 2008
    Location
    De Wildt
    Age
    56
    Posts
    34,100
    Thanked: 9331

    Default Re: Finance advice: paying off car vs paying off house bond

    Quote Originally Posted by Leeubok View Post
    In our local town it is definitely a buyers market at the moment. House prices are really low, and some have dropped prices drastically just to eventually get rid of them. The outlook for the town (and the country as a whole I suppose) isn't great, so one could argue buying a house there will result in depreciating capital. But this is our only option. Either that, or stay in the bush and keep on homeschooling
    I'd rent with an option to purchase. In a depressed economy in a remote town, the owner/landlord can hardly expect prime rentals. And this won't lock you into a bond for a property that you might not be able to sell.
    2012 Jeep Sahara Unlimited 3.6 V6
    Percivamus

  37. The Following 3 Users Say Thank You to jelo For This Useful Post:


Page 2 of 4 FirstFirst 1 2 3 4 LastLast

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •