Better to buy the car first, or the house first? Please read:?

We have great credit. We have been approved for a loan, but we haven't found the house we really want. We also want to get a new car.

I have seen situations where if a person still even has only $1000 left on a car loan, their mortgage is approved for $20,000 LESS than if they didn't still have the car loan.

I am guessing it is better to buy the house first, then get the car, but I think we will actually NEED the new car sooner than the house.

Thanks!

Buy the house first and then think about the car. And for the car think about a nice used one that you can pay cash for or at least with a smaller loan. Good luck to you.

Hi gg,

You already have some pretty good answers here :) They should help.

hmm

gg, this is not an easy question to answer as it really depends alot on which stage of our lives we are in.

WHAT IT LOOKS LIKE

I saw some of your questions before this and understand that you have a baby (Congras!) , your age (shhh *winks* and roughly about your financial status. I would think that you have a very happy family and you most likely already own a house and a car which might be giving you some trouble with maintenance. I do apologize if the above overview might differ from reality *Smiles*.

If it's advice for a couple just starting out in life, I would think most of us would agree with the "House first, Car later". A car is more of a liability as we know if it doesn't help bring in income (like for a real estate agent), a home (if not for investment) if planned right, can be an asset instead of an liability. (think property rise vs inflation minus rent that can be saved) Location location location and of course affordability, never bite off more than we could chew when it comes to monthly payments.

RESEARCH ANALYSIS

For your scenario, gg, if you already own a house and car and just looking to upgrade your house but at the sacrifice of a new car, I would think that you might be thinking "What if I got a new home but my car breaks down often, by then, I can't get a new car but stick to a problematic car." gg, if it is really a problematic family car that NEEDS to be changed, it is at the bottom of the pyramid, something that involves risking of the safety of the family.

I'm sure you thought of it already, that may be one of the reasons you hesitate against the decision of a new house immediately (and also haven't found a house you like yet).

I can go on and on here *winks* but I'll give it a summary based on the above.

WHAT CAN BE DONE

With your financial status, I would think it might be a better decision to buy a new car which doesn't cost a bomb to replace the problematic car first to reduce risk and increase safety as a priority.
Work out a good plan to clear off the car loan asap, or rather, pay for it in full rather than by loans, you can save alot over the long run because of the interest you don't need to pay when you pay in full. The real price of a car including interests at the end of the loan, can be a waste of money because of the choice to drag in exchange for time. Get a decent car, good looks, reliability without being too posh. Will be fine :) A car doesn't earn us money, just gets us to places, just don't get one that makes us look bad, don't sacrifice too much, get one which makes us feel Comfortable :)

If you can get the car paid off asap, maybe in a year or sooner. You can get the house loan without the penalty of the car loan affecting your credit rating, lesser monthly payments + interest and a lighter happier heart :)

Here's another reason. I imagine that if in this situation, we get BOTH Car and Housing Loans at the same time, I would imagine that we will be spending 1 or 2 months EACH year we have the loan JUST to pay for the interest both add up to become over the long run. All this extra money you can save can be put to better use for your child and other investments.

I think you might already have an answer in your head when you asked this question :) Hope that the above analysis helps abit for you.

ANOTHER ALTERNATIVE

Here's another alternative, use the capital for investments and use it to generate more streams of passive income every month (maybe an investment property, business and stocks but ONLY if we know what we are doing. We know guessing is not investing, *winks*)

FINAL THOUGHTS

...and then, if the car looks like it's going to break down any time soon and you really need the car if public transport is not an option, invest in safety :) Get a new and logically affordable car first....moving into a new home is often more expensive than it seems at first, by then if the car breaks down, manz, that's gonna hurt.

All the best gg, hope this helps.
Eric Chua

HOUSE!!!!

We had the same exact problem. It was exact. We needed both. I eventually came to the conclusion that the house could be blocked by the car, but not the reverse. I had the good fortune of acting before the housing crisis. And we picked up the car in September, when 80% of all applicants were denied.

Please take that question to a Home Loan Agent. The more you learn, the luckier you will become.

buy the house first. I suggest you buy a cheap used car if its your first car. I wouldnt waste money on a new car since it looses its value as soon as you drive it away.
a house will go up in value, a car will go down each time you drive it and as time goes by. If you will NEED a car, then you should probably buy a cheaper and used car and use most of the money/loan for a house

House, definitely. You don't want a recent loan on your credit report.

No one NEEDS a car payment. If your car breaks down, just get it repaired. If it is beyond repair, spend $2000 or so and buy a used car to get you by until you settle on your house

Do you NEED a new car or just "want" a new car? Buy the house first.

WHATEVER YOU DO, DO NOT USE THE HOUSE LOAN TO HELP PURCHASE A CAR. THE HOME LOAN IS USUALLY FOR 30 YEARS AND A VEHICLE IS USUALLY 5 YEARS. YOU DO NOT WANT TO PAY FOR THAT CAR FOR 30 YEARS.

IN TODAY'S MARKET, BUY THE HOUSE YOU CAN AFFORD TODAY. IN YOUR EQUATION FOR "WHAT YOU CAN AFFORD" BE SURE TO INCLUDE REPAIRS AND MAINTAINENCE OF THE HOUSE.

YOUR BANKER, IF HE'S WORTH HIS WEIGHT, CAN TELL YOU THAT YOU HAVE TOO MUCH AVAILABLE CREDIT OR NOT. AND IF YOU CAN ALSO CARRY A CAR LOAN. HE WILL GET A CREDIT REPORT ON YOU AND YOU CHECK TO SEE IF YOU HAVE OPEN CREDIT CARD ACCOUNTS THAT YOU HAVE FORGOTTEN ABOUT, THEN CLOSE THOSE.

BE SMART ABOUT YOUR MONEY.

Definetly buy the house first, cars come and go but you could be in that house for another couple years, so i would give buying the house top priority

Get the house. You can just get a cheaper, used car. It's much better to have your own home than to rent.

A cat is a cat. But an Elephant is indeed an Elephant. Better start your experience with a cat. Experience is on top of education.

Good luck.

Christo.

Well, Both of them are very very nececcery in a life. But i guess better to buy a house first so you will have a place to stay in it. than u can buy a car, If you buy a car first and don't have a house where will u park it and where will u live, In Hotel or what ? If you buy a house first than you can drive in a taxi or in a bus,

Thank you

if you have set money by for both then get the car first if you need it.
good luck

Enter Your Message or Comment

User Name:
User Email:
Post a comment:

Archive: Forum -Forum -Finance - Links - 1 - 2 - RSS - All RSS Feeds
The Causes and the Results. 0.024
Copyright (c) 2011 Financial Crisis Monday, May 28, 2012 - Terms of use - Privacy Policy