Is it a good idea or not? This is in Canada (Toronto)

Looking to purchase a car around $40,000.00

There are a few options I am considering to finance my car and I'm not quite sure which is the best.

1. Car Finance - rate of prime(2.7% currently) over a 7 year term. payments would be $523/month

2. Take a HELOC and fix a term for 15 years amortization - rate of 2.39% 5 year fixed . payments would be $267/month

Can't really calculate the total interest paid because rates may change over the course of the terms. But for argument sake, if all variables stay the same the total interest paid would be

1. $4000

2. $8000

Looking at this, it looks like option 1 would be a no brainer but the difference in payments/cash flow would be $256/month which could be used for savings/investment of some sort or even the ease(reduced stress) of monthly obligations.

Future goals/objective, I would definitely want to purchase another property in the near future. I may understand that some of you would say don't buy the car at all and just save for the other property then but for the quality of life, enjoyment, convenience it is totally worth it.

Should I take the car finance and keep my HELOC room available to put as a DP towards a new property?

Ask your financial advisor to break it down for you.

why in the world would you finance for 15 years? I don't know many people who have ever kept a car that long.

well I figure, if you finance for 7 years or 15 years, what's the difference? you're still paying for the car.
if you finance for 7 years and decide to sell after 7 years or if it's financed for 15 years and sell after 7 years you've just paid less for the car over that time period
but the same dilemma above still applies

Idk, if youre a collector, you keep stuff longer than 15 years.

You know, you don't have to make the minimum payment per month. Typically, you can add addition payment to the principle.

I've never even heard of a 15 year car loan, yet, longer terms allow for a lower monthly payment allowing him to use the "extra" money elsewhere.

Maybe during some months, an individual can pay the minimal payment and an additional principle payment, but other months, there could be other major financial responsibilities, and paying the required minimal amount would be more ideal. It allows flexibility, and you can still pay the car off in a few years if you choose to. I took out a 72 month loan so I could have low monthly payments, just in case something came up. However, I paid it off in 23 months.


I wouldn't take option number 2 if you plan on making minimum payments and go the full 15 years. Also, make sure there are no early payoff fees for either loan.

This post was edited by stupidkid282 on Oct 16 2016 07:46am

15 years good deal yea

Better off financing the car without a heloc... you go to move and your house goes under water you're pretty SOL.