Can You Get A House For A Car Payment? You Bet!

house-less-than-car Have you seen some of the crazy car payments people have today? These days people are buying cars that are way out of their price range. If it isn’t bad enough that people buy overly expensive cars, then consider this. People no longer finance cars for only 3 years, but instead finance cars for 5, 6 or even 7 years.  Take this car loan and payment, for example:

  • $30,000 car loan
  • Payable over 5 years!
  • 2.9% interest rate
  • $537.73 payment per month

A huge part of America wouldn’t even blink at a car payment this big. They’d accept it as a part of life and move on. The thing is, they have no clue what they’re missing.

Believe it or not, you can get a mortgage and own a house for less than the payment on this car. How do I know? I’ve done itYou could have a house for a similar monthly payment and at the end of the loan you’d actually own something worth more than when you bought it! Of course, your loan will last longer than 5 years, but the monthly payment will be the same or less!

What You Get When You Buy A Car

When you buy a car, you’re buying transportation that will take you from point A to point B. Your car has a distinct purpose and can save you a ton of time over other transportation options. However, cars have a pretty defined useful life and as you use your car, its value will decline slowly until the car falls apart and is worthless. Cars depreciate over time and in the end you sell the car for much less than you pay for it.

Instead You Could Get A House

A few years ago, I wouldn’t have thought it was possible to buy a house for less than a car payment, but I was wrong and I actually did it myself! Here’s an example that actually cost more than my house did:

  • House Sales Price: $100,000
  • Down Payment: $20,000
  • Loan Term: 30 years
  • Interest Rate: 4.50%
  • Payment (before insurance and taxes): $405.35

That’s over $130 less per month than the car payment above! Crazy! Now, keep in mind you will have to pay insurance and taxes. You’ll have to maintain your home. However, in the end you’ll own a house and the home will be worth a ton more than that car that would be 30 years old.

Before you start complaining that buying a $100,000 home is impossible, let me point out that it is possible and the only thing stopping you is yourself and your choices. The house probably won’t be huge and it definitely won’t be in a major metro area. It can in fact be a very nice house, it just might be in a different part of the country.

Considering that housing is normally one of the most expensive parts of a person’s budget, if you move to a cheaper area of the country to buy a cheaper home you can probably take a pay cut and still end up financially ahead. It is possible to have a house payment that’s less than a car payment and I’ve done it!

Have you ever had a house payment that is smaller than a typical car payment? Were you shocked that it is possible?

Picture by: 401(k) 2013 Text added by: Lance Cothern

Did I Catch The New Car Four Year Itch?

new-car-four-year-itch In just a couple of months my very first car that I purchased new, my Honda Civic, will be four years old! Well… four years old to me anyway. I don’t know what month it was manufactured in! When I bought my Civic I bought it with the intention of driving it forever… Well, forever as far as cars go. I figured it’d last at least 10 years before it made sense to replace it due to repair costs of maintaining an ancient car.

It seems I’m a rarity when it comes to car buying behavior. Most people, as soon as their car loan is paid off, buy a brand new car to replace the car they just paid off! I guess people like being in debt and having a car payment, but I’m not a normal person. I did wonder, though, if I’d get the new car itch after the first few years.

Am I Looking For A New Car After Four Years?

HECK NO! That’s the short answer. Do I like looking at the new cars everyone else is driving? Of course I do. New cars are fun to look at! In fact, I like old cars too. But that doesn’t mean I want a different car for me.

I carefully selected the car I bought four years ago to meet my long term needs. I bought a Honda Civic because it got great gas mileage, was a reliable car and it’d last me a long time. I thought ahead and bought the 4 door sedan rather than a 2 door coupe because I knew I’d need the extra doors when I started my family, which I hoped to do while I still own my Civic even though starting a family is still a few years away.

When I bought my car, there were other cars that I liked the looks of better, such as a Pontiac Solstice or a Saturn Sky. Of course, there were nicer cars I liked too, such as BMWs, but they were quite a bit out of my price range for a car. So what was my reasoning behind buying my Civic rather than another type of car?

Why I Bought And Will Be Keeping My Honda Civic

I view my car as a method of transportation. It gets me from point A to point B reliably and it does have a few creature comforts for the longer road trips, such as cruise control. However, I do not want my car to be a status symbol of how I see myself fitting into society. I don’t care how fast it can accelerate. I bought it to fit my transportation needs.

Will I ever buy another car? Of course! I don’t expect my little Honda Civic to last forever but I expect it to last at least another 6 years at this point. I might even buy another new car down the road, although I would definitely buy a used car if it is a better deal at the time. Unless I’m wealthy beyond my wildest dreams though, it won’t be a fancy car and will likely only meet my transportation needs for the next 10 or so years!

How often do you end up buying a new to you car? Do you buy new cars or used (new to you) cars?

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