StephenG wrote:
IceCreamMan wrote:
just remember ppl, a bond is probably your cheapest source of loans
sorry but that is totally wrong!! a bond is ONLY the cheapest loan for the immediate short term month by month repayment. Long term, you end up paying a hell of a lot more for something that you may have tapped into your bond for.
LONG TERM - it is cheaper tp pay someting off at a higher interest rate over 3 - 5 years than it is to pay off is it came fomr your bond over a period of, say 10 - 20 years..
I hear what you're saying but IceCreamMan is certainly not wrong. Of course it is cheaper to pay something off over a shorter period but that is no proof that vehicle fincancing is cheaper than a bond. The fact that your house is mortgaged over 20 years doesn't stop you from paying it off in 5 years. So a bond is not more expensive than vehicle finance, it's all up to how quickly you pay it off (i.e. how much interest you can avoid).
The point is, when you have a lump sum to pay towards your debts, it only makes sense to pay it into the loan with the higher interest rate (that would be your vehicle finance, not your bond). I believe that is what ICM is saying. It costs money (in the form of interest) to borrow money. Some loans cost more money than others. Vehicle finance costs way more than a home loan - which is why it is said that a home loan is cheaper than vehicle finance.
