Financially, is it better to pay off my car or buy a condo/townhome?

Question

I have a year of car payments left. My apartment lease is up in May. I can pay the car off soon, or keep those savings for a downpayment on a condo/townhome. I'd essentially just delay paying off my car for 6-7 months to start owning my own place. Else I'd put the downpayment down and start paying down a condo/townhome and just make normal car payments.

Thorough advice is appreciated.

Answer 1

If you find a place you love or already have a place in mind, use your savings for that. Don't just buy for the sake of buying though, because real estate is a long term investment and you may have to live there for a few years before you can make a profit. Also if the rate on your car loan is super high you may be able to do a deal with your mortgage company where you can lump the car loan into the mortgage.

Answer 2

It would be better to save the money in an interest bearing account. Continue to make your car payments for the term left, and see if you can get a first time home loan with nothing down. I say this b/c you will need to furnish the house, and have somewhat of a nest egg in the event that something went wrong with the house or car. That way if something happened, you always have the cash. And only do this if you can afford too. A car is a bad investment so I would not spend the cash that I had saved up to pay off the car.

Answer 3

Much better to invest in a home. Real estate has shown remarkable resiliance throughout history. A car depreciates the moment you take it from the showroom til it is virtually worthless. It will rarely ever again happen that a vehicle will be worth more in the future than it is at present. For instance, my nephew had enough money to either buy a car or use the money as a down payment on a home. This was about 7 years ago when you could buy a home in the low 100,000s. He chose to purchase a car. The home he would have purchased is now woth $300,000-$400,000. He could now sell that home and buy 4 cars. But he could never get a mortgage for a home today even if he had 4 times the down payment he had then. If you can afford a home, do it now.

Answer 4

It would depend on your other finances really. Paying off your vehicle is great because it is one less payment a month you need to make which adds a few extra hundred (depending on your payment) a month into your account to either save or use else where.

In the long term though, I'd say owning a home is definitely the way to go because you are already paying to own your car...and if you continue renting that is basically like burning money since you will never see any sort of return on it. If you own a home, even though you pay a mortgage, someday when you sell the house you get a return on that cash (not to mention interest paid on the mortgage is tax deductable!!)

Good luck to you!!

Answer 5

Depending on your credit, income, assets, and liabilities, you may be able to finance a home with a 100% loan, while still paying off your car in the next year. You have to figure that mortgage loans are typically amortized (spread out) over 30 years. Depending on how much your car payments are, let's say $300/mo, that by not paying off the car you would have approx. $3600 to put down on a home. This would barely make a dent in your monthly mortgage payments. As long as the payment for 100% financing is feasible for you, this may be the route to go.

Answer 6

I would suggest paying off your car first and then buying a condo or town home. The reason is simple. Your car builds interest and when you pay it off your credit score goes up because your debt went down. So, with a lower debt, you may be able to get a much better interest rate on the condo or town home.

Answer 7

it sort of depends on the interest rate on your car, how much your car is depreciating, how long you anticipate keeping your car, how much you can save in your bank account, and what your target condo price & down payment would be. lots of variables...so it's hard to say without actual #s - but you have the #s so just put it all in excel and figure out how much the car is going to cost you & how long you want to keep it vs. how much it will cost you if you don't pay it off... if you will make more money by keeping the car financed and you plan to keep the car for a long time (staving off depreciation issues at trade-in) then keep it financed - but only after you determine your down payment on the house and it is high enough that you need to keep real cash in your bank acct. i dunno exactly how to explain this...sorry! hopefully this was somewhat helpful

Answer 8

Buy a house(condo/townhome)! Cars depreciate where as homes appreciate. It also helps credit if you have plenty of bills that you pay on time, making it easier to get a better rate. Mortgage Consultant. email if you need help.

Answer 9

once you win an public sale on eBay, a freelance is created. You agreed to purchase the vehicle and pay the $500 deposit. If the organisation needs to play not hassle-free ball, he's were given you. A 2001 Monte Carlo got here new with air bags. What happened to those?

Answer 10

Cars depreciate the moment you take them out of the dealership. Unless you have an antique car, your car will never gain worth.... Therefore, buying your own place is the best way to get your money's worth. Real estate is the one of the fastest ways to have your money grow. If you don't believe me, ask DONALD TRUMP... Get your own place and it will appreciate in value in a couple of years and then you can resell with a profit....