Now before everyone freaks out, this is definitely something I have thought about and to me, this is a no brainer.
When I first bought my house, I was a few months shy of qualifying for a company home loan. Unfortunately, because I had found the house I wanted at the price I wanted, I couldn't afford to wait. However, I now qualify for this company home loan which is with one of the big four banks of Australia. Not only do I get this loan at a significantly lower interest rate, but my company will also pay approximately $220 a month onto my mortgage. There is no catch. It is purely and simply free money. What is even better is that the longer I work at my company, the more that increases. And I get it for the life of the loan.
Told you it was a no brainer.
I have been having some issues with my car lately. Now there is nothing wrong with the car per se (it's still under warranty after all), they are more issues I am having personally. I don't feel particularly safe in it and I know in a couple years (probably when the warranty runs out), I will start to have problems with it.
Thus, I have decided that when I refinance, I will borrow some extra money and purchase a new car.
Again, don't freak out!
I am currently earning roughly $600 extra a month and this will continue for the next few years. By placing this extra money directly onto my loan, I will essentially have the car paid off in 4.5 years. Thus I will not be accruing an exorbitant amount of interest on it. Not to mention that extra $220 paid straight onto my loan.
I have thought long and hard about this and believe it is the right decision for me. I am buying a 4WD (I believe Americans call them SUVs), albeit a small one. This will allow me to have the car for 10-15 years as it is of a size that will not require me to upgrade if I have children. I am buying from reliable brands which I know will last me a long time.
So, overall, I am happy with my decision to do this and so, so excited! I appreciate your feedback, even if you do not agree with what I am doing.
I don,t disagree with the theory behind you taking on debt to buy a new reliable vehicle. But for myself I would only be comfortable doing it if I had a fairly significant Emergency fund and also savings behind me.
ReplyDeleteAre you sure you are going to remain with this firm, for at least the next 4.5 years, also if you take ill over a long period how will the repayment be met??
Aaahhh, this sounds like the argument I used with myself when I financed a new car a couple of years ago. Seemed like perfect logic at the time. However, in hindsight, its something I've regretted, as cars do depreciate horribly. Given that you are trading in your newish (i.e. still under warranty) car, do you really believe you will want to keep this one 10-15 years? I had others give me similar advice when I did it, and ignored them. In hindsight, I would have been better off if I hadn't!
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