Change cars or stay?

[CTR]

Thanks everyone! My car is paid off.

I was thinking of trading in my car (probably around R180k) for another BMW in the region of R300k.

Tough decision :hammerhead:

Good choice:thumbs:

 

[MR_Y]

Thanks everyone! My car is paid off.

I was thinking of trading in my car (probably around R180k) for another BMW in the region of R300k.

Tough decision :hammerhead:

If you have enough excess funds in your home loan's (bond's) access facility, rather use that as your maintenance fund and keep your current car. In the meantime, just pay what installment that you would have paid on a new car towards the bond's access facility.

Scenario 1: Your car bombs out tomorrow and you then draw on the R100k access facility on your bond (assuming you have this), then you will effectively be "borrowing" R100k over the remaining period of your bond (which, if 10 years +, would be less than the normal installment that you would have paid on a 60 month car finance deal). By plugging in the installment that you would have paid on a new car towards this newfound hole in your access facility, you would fill-up this hole fairly quickly.

Scenario 2: Your car does not bomb out now, but sometime in the future. By plugging in the installment that you would have paid on a new car's finance into your bond, not only will you be reducing the term of your home loan (saving on interest), but you would have built up a fairly strong access facility/maintenance fund to handle future maintenance.

Scenario 3: You have enough access facility in your bond to buy a new (or preowned) car. Your home loan installment would jump up a bit, but not as much as if you had financed the car itself over 60 months (your home loan would be, I guess between 120 and 240 months remaining?). This would give you a reduced monthly burden, but you would not end up better off from a lower overall debt obligation standpoint as Scenario 1 and 2 above.

Obviously, if you have no bond or access facility with R100k at least, then the above advice is moot. Still, good for others to note.