I have 50k in savings and need to buy a new car to go to work. Car costs around 13-16k. I can pay it directly or finance it (6k paid directly and then about 80€/month).

But I am planning to buy a house (200k-300k) and usually you require minimum 10% to start with...

Financially what would be better?

A) Pay in cash and have about 35k to buy the house?

B) Finance car, try to buy house with 44k, and then try to get rid of car finance asap?

  • 1
    Can you find a cheaper car?
    – Michael
    Dec 11, 2017 at 12:28
  • In the US, car loans often have significantly lower rates than mortgages, so it can make more sense to finance the car and have more money for down payment, especially if it crosses the 20% down payment mark, which helps people avoid PMI. You'll have to find out about loan rates for auto/home and what difference a larger down payment can make to make a good decision. Are there tax benefits to owning a home?
    – Hart CO
    Dec 11, 2017 at 16:33

2 Answers 2


Assuming that you can afford the monthly payment on a 180k mortgage, and taxes, and utilities, and and maintenance costs...

Buy the car with cash. Then either save up the money again for the down payment or buy a smaller house (in the US you can avoid private mortgage insurance by putting at least 20% down - I don't know if there's a similar point in Spain).

If you finance a car now and buy a house, you'll have two large monthly payments to deal with, which might leave you cash strapped for your day-to-day needs.


If it was me, I would much less of a car and pay cash. Then try and go and buy a home.

One is always better off paying cash unless you can get an extremely high negative interest rate. That is they pay you to take the loan.

  • 2
    "Buy a beater" is an almost reflexive pseudo-answer which does not take into account the realities of any given situation.
    – RonJohn
    Dec 11, 2017 at 12:51
  • @RonJohn You can buy a pretty nice car for less than 4k USD. I've been driving "a beater" to work for the last 5 or 6 years. The commute I have now is 53 miles each way. So I am unsure why you would think it is unrealistic.
    – Pete B.
    Dec 11, 2017 at 13:00
  • 1
    @RonJohn: Unless those "realities" (which are usually illusions in the asker's mind, e.g. "I need a new car for status") are spelled out, I think we're justified in assuming they aren't relevant. Absent some special circumstance, one is ALWAYS better off buying a "beater".
    – jamesqf
    Dec 11, 2017 at 19:05

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