cars, utes

Irene Babu Nov 17, 2023

 

If you’re ready to dive into the Stratton process and get approved quick smart, or if you have any questions, give us a call on 1300 787 288. Our friendly team is here to assist you every step of the way.

Should you consider putting a car loan on the mortgage?

In the pursuit of acquiring assets like a car, it's not uncommon for individuals to contemplate the idea of leveraging their existing mortgage. However, the decision to intertwine asset finance and mortgages should be made with careful consideration. At Stratton Finance, we believe that understanding the pros and cons of this financial choice is essential to make an informed decision that suits your unique circumstances.

Imagine this scenario: You have your eye on a car with a price tag of $30,000. You're weighing the options between a five-year car loan with an interest rate of 6.5% per annum and increasing your 25-year home loan, which currently carries an interest rate of 5% per annum. On the surface, the latter might seem like an attractive choice due to the lower interest rate and consequently lower monthly repayments. However, it's crucial to delve deeper into the implications of this decision.

While it's true that a home loan typically offers a more favorable interest rate than a car loan, extending your home loan for an asset purchase can have long-term consequences. Here's why it's important to think twice:

  1. Extended Loan Term: By incorporating your car purchase into your mortgage, you're effectively extending your home loan term. This means that while your monthly car-related payments may be lower, you're committing to paying off this debt over a much longer period, often spanning decades.
  2. Accumulated Interest: The allure of a lower interest rate can be misleading when you consider the extended loan term. Over the course of many years, the cumulative interest paid on your car purchase can far exceed what you would have paid with a shorter-term car loan.

In the example mentioned earlier, choosing the 25-year home loan over the five-year car loan might result in paying approximately $11,000 more in interest. This substantial difference highlights the importance of carefully evaluating your options.

Here's what sets Stratton Finance apart:

  • Personalized Solutions: We don't believe in one-size-fits-all approaches. Our experts take the time to understand your unique financial situation, goals, and preferences to recommend the most suitable financing option for your asset purchase.
  • Extensive Lender Network: With access to numerous lenders, we can shop around for the best deals on your behalf, ensuring you get the most competitive rates and terms available in the market.
  • End-to-End Support: From the initial inquiry to the loan application process and eventual settlement, our dedicated brokers are with you every step of the way. We demystify the complexities of asset finance and mortgages, making the process smooth and hassle-free.
  • Client-Centric Approach: Our primary focus is on helping you achieve your financial goals and securing the assets you desire without compromising your long-term financial stability.

Ready to Begin Your Journey with Stratton?

Navigating financial decisions doesn’t have to be complicated. With Stratton Finance, you’re choosing a partner devoted to making the process as seamless and comfortable as possible. If you’re ready to dive into the Stratton process and get approved quick smart, or if you have any questions, give us a call on 1300 787 288. Our friendly team is here to assist you every step of the way.

 

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In the pursuit of acquiring assets like a car, it's not uncommon for individuals to contemplate the idea of leveraging their existing mortgage. However, the decision to intertwine asset finance and mortgages should be made with careful consideration. At Stratton Finance, we believe that understanding the pros and cons of this financial choice is essential to make an informed decision that suits your unique circumstances.