Bond vs Car payment

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Fuma

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There was this property that was going for R480K and I negotiated to about R350K.
Then again there can be a nice car for that much (R350K).
Obviously buying a property will be a great decision. In fact it's not a decision.

Since you can take 5 years to pay off your car. Will the same costs (interests, etc) be the same for a property if I pay it over 5 years?
 
Factors affecting monthly payment are:
1) Present value. In this case identical
2) Interest rate. In this case identical
3) Compounding interval. In this case identical I assume
4) Period. In this case identical
5) Balloon payment/FV?

So yeah should be the same if there isn't a balloon payment & compounding interval is the same. If you have a financial calculator handy then you can calculate the monthly payments.

I'd reckon the property is the better bet. Doesn't depreciate as heavily.
 
Heita_Hola said:
There was this property that was going for R480K and I negotiated to about R350K.
Then again there can be a nice car for that much (R350K).
Obviously buying a property will be a great decision. In fact it's not a decision.

Since you can take 5 years to pay off your car. Will the same costs (interests, etc) be the same for a property if I pay it over 5 years?
Click to expand...

Lawyer and conveyancing fees as well as transfer duty will apply to the property Avg R10K for conveyancing and I think 8% of the selling price for the transfer duty (stand to be corrected here). You could pay that out of pocket in which case, the actual bond amount will probably be the same as the car payment. If you choose to capitalise these costs into the bond, then of course the payments will be different. Also some banks charge different admin fees for bonds and car finance. For eg, I pay R17.50 for bond admin fees on my bond and R40 per month on the car financing. Another thing that will make a difference is the insurance if you choose to incorporate that cost into the bond/car finance or do it separately yourself.
 
Rand for Rand, and both over 5 years, the bond will be less than the car normally.
Different rates.
 
Home loan will definately be cheaper over the same period.

The interest AFAIK is calculated differently on a car.
 
Heita_Hola said:
There was this property that was going for R480K and I negotiated to about R350K.
Then again there can be a nice car for that much (R350K).
Obviously buying a property will be a great decision. In fact it's not a decision.

Since you can take 5 years to pay off your car. Will the same costs (interests, etc) be the same for a property if I pay it over 5 years?
Click to expand...

WTF do u want a 350k car when u don't have property?
Buy the property and pay it off in 5 years, maybe u can add your car to the bond and get a lower interest rate after a couple of years.
 
No transfer fees on properties under R500k - thanx to Trevor. If you use a bond originator to negotiate your bond, they sometimes subsidise the registration fees - up to 100%!. So this bond can cost you very little to obtain. If you qualify - take out a bigger bond than what you need at prime minus 2, then you can even finance a car at a later stage.
 
Heita_Hola said:
There was this property that was going for R480K and I negotiated to about R350K.
Then again there can be a nice car for that much (R350K).
Obviously buying a property will be a great decision. In fact it's not a decision.

Since you can take 5 years to pay off your car. Will the same costs (interests, etc) be the same for a property if I pay it over 5 years?
Click to expand...

Leave the car - Buy the property.

If you are going to rent out the property once it is paid off, try to either spend regularly on renovations, or keep some sort of bond over the property. You'll need some expenses relating to the income earning property, otherwise the tax man will take more...
 
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