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Topic # 192122 28-Feb-2016 09:45
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Wanting to top up our car spend amount without hacking our savings.

 

Who is the cheapest to approach for a small loan of $5-7k?


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  Reply # 1500607 28-Feb-2016 09:49
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I'd secure it against your mortgage (through your bank) if I were you (Assuming you have one). This way you would have rates FAR below anything any other finance firm could/would offer you.

 

Even consider throwing it onto the floating/variable part of your mortgage.


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  Reply # 1500610 28-Feb-2016 09:52
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Take it from your savings! Taking a loan out when you have the money does not seem like a smart idea

 
 
 
 


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  Reply # 1500612 28-Feb-2016 09:54
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Is the interest rate on the loan going to be less than the after tax return on your savings?




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  Reply # 1500615 28-Feb-2016 10:14
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 I know what you are saying and I agree, but the Mrs refuses to see it that way and wants the loan. Im not going to argue anymore over it with her :-)

 

No we do not have a mortgage, cheaper to rent in this bubble. But I use to do that with my old house, was 6% back then.

 

I presume she is looking at about 14% pa?


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  Reply # 1500617 28-Feb-2016 10:15
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Assuming your savings are in a bank at 2% a car loan is at 10% 

 

Very roughly (ignoring tax and compound interest, admin fees, establishment fees etc)

 

$5000 * .02 = $100 a year interest

 

$5000 * 0.1 = $500 a year interest

 

Using a car loan instead of your savings would cost you an extra $400 a year (would be much worse than this because of fees and compounding interest)

 

 

 

The use of your savings makes much more sense.  

 

If you don't want to use the savings as it is a deposit for a house keep in mind that a car loan counts against your deposit in a home loan application anyway

 

 

 

 


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  Reply # 1500619 28-Feb-2016 10:19
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The other option if digging into your savings are a no go

 

Use your credit card, change banks and get the balance transferred at 0% for 12 months and make sure you pay it off in the 12 months

 

 

 

https://comms.anz.co.nz/balancetransfer/index.html?cid=sem--creditcards--c&gclid=Cj0KEQiAr8W2BRD2qbCOv8_H7qEBEiQA1ErTBqZPh5JM-xZ5NYacXy6LmehkWLoc2yZ8OHF3YUwiVLsaAk798P8HAQ




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  Reply # 1500642 28-Feb-2016 11:22
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She has her reasons for not wanting to use her savings. I do agree in most circumstances loans are a bad idea.

 

She doesnt have a credit card but thats a very smart thought.

 

Im presuming 10% is unlikely Ive told her 15%.


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  Reply # 1500644 28-Feb-2016 11:25
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dont top up and get a more expensive car then

 

you are silly if you get a loan when when you have the money there




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  Reply # 1500645 28-Feb-2016 11:29
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 steady on with the personal attack genius. she has very valid reasons and doesnt need to justify them on here. her savings are tied up elsewhere.


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  Reply # 1500649 28-Feb-2016 11:42
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TeaLeaf:

 

She has her reasons for not wanting to use her savings. I do agree in most circumstances loans are a bad idea.

 

She doesnt have a credit card but thats a very smart thought.

 

Im presuming 10% is unlikely Ive told her 15%.

 

 

 

 

ASB has a low interest credit card at 13.5% with no interest for 55 days (account fee $20 6 months), stay with them for 55 days then transfer to ANZ which has no interest on transferred balances for 12 months.

 

 

 

Car loans have establishment fees of around $400


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  Reply # 1500650 28-Feb-2016 11:43
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johnr: Take it from your savings! Taking a loan out when you have the money does not seem like a smart idea

 

Your savings account will always pay less than your loan cost. Get from your savings and be done. Also the car depereciation should be counted and your loan won't get cheaper - so it will cost more at the end.





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  Reply # 1500654 28-Feb-2016 11:45
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TeaLeaf:

 

 steady on with the personal attack genius. she has very valid reasons and doesnt need to justify them on here. her savings are tied up elsewhere.

 

 

Well, no one knew it right? The first post mention savings that you don't want to dip into. 







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  Reply # 1500674 28-Feb-2016 11:46
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 thanks blackjack for actually answering the question after stating savings are not an option.

 

she has 2 european credit cards but too much hassle trying to change banks abroad.

 

her cheque account is with ASB so that might work.


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  Reply # 1500679 28-Feb-2016 12:03
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We went through this situation when we were getting married, approx 6 months out from the wedding we had to replace the car.

 

We applied for a new credit card and got approved, most banks offer a special rate for a transfer of credit, either for a fixed term, or until the entire transferred amount is paid off.

 

We did a cash advance on our existing credit card, took out $7000 from memory from an atm, that day we paid cash for the car, and also organised the transfer to the new credit card. 

 

This was our only option, as topping up the mortgage was too costly, and had no money left for a new car after budgeting for the wedding. From memory this process cost us approx $70 in fees, ie the cash advance fee.


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  Reply # 1500680 28-Feb-2016 12:12
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rscole86:

 

We went through this situation when we were getting married, approx 6 months out from the wedding we had to replace the car.

 

We applied for a new credit card and got approved, most banks offer a special rate for a transfer of credit, either for a fixed term, or until the entire transferred amount is paid off.

 

We did a cash advance on our existing credit card, took out $7000 from memory from an atm, that day we paid cash for the car, and also organised the transfer to the new credit card. 

 

This was our only option, as topping up the mortgage was too costly, and had no money left for a new car after budgeting for the wedding. From memory this process cost us approx $70 in fees, ie the cash advance fee.

 

 

We bought a $9000 car on the credit card. Paid in full next month but that gave us 30 days interest free money. If it is a car dealer and it accepts credit card it is a good way to go - our card paid cashback too so it was a few dollars back in the account too.





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