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Michael M.
Michael M.
Barden Ridge, NSW

Just about to sell house due to separation and owe money on a car, should I pay car off 28K and save the 400 a month or keep paying car and buy?

4 years ago

It cannot be advised what is best for your particular situation.
But a few things to realise.
If you're looking to buy a new place on your own, post-sale, you'll need to have some money left over for funds to complete. Usually 10-12% of the property value, dependent on the house price.
The more funds available, the lower the Lenders Mortgage Insurance premium will be.
Paying the car loan would use a chunk of the proceeds of sale.
On the other hand, if you're looking to buy but serviceability is an issue, closing the car loan may be necessary, so you pass the lender's capacity requirements.
It would be prudent to book a time with a broker and discuss the situation in depth, so that you can make the most informed decision. You ought to have run the numbers on your borrowing capacity in both situations, as well as discuss what your objectives are, post sale
- Ben


Hi Michael.
Not really sufficient information to enable me to answer your question.
Would need to know more about your situation.
Employment, income, dependants, home prices in your area and details of any other debts aside from the car.
Also, how much you will have following sale of matrimonial home.
Would you want to keep the house if possible?

Hi Michael, great question.
Having a loan repayment on the car will affect the amount you can borrow, however, having the cash available will help with your deposit. Unless you have additional funds that can be used as a deposit?
Rose 0411181938

Hi Michael,

In times of change it's a good idea to take some time out for yourself and make plans your future. Once you know where you're heading you'll be able to answer your question. A simple fact find with a broker or lender will help you work out what's achievable in the short and long term and help you set some achievable goals.

If you're not ready to think about future plans, an interim solution may be to replace your car loan with a personal loan. The personal loan should provide you with an option to contribute additional funds without penalty - thus saving you interest - and provide the ability to redraw these funds if and when required

This can turn out to be an expensive exercise, if you are thinking about going down this route, you should keep the following in mind:

1. Does your current car loan provide you with a tax benefit i.e. is this a work vehicle

2. Fee's relating to the early termination of your current finance contract

3. Personal loan rate's, fee's and flexibility

4. Loan Term - Try to mirror the remaining term of your current loan

Once you have all of these details you can weigh up the cost and what's right for you.

All the best,
Gerry Ardesi

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