domhatch wrote(most) cars will depreciate in value over the finance period, and you will make a net loss in the asset. this is - as far as i understand - called a depreciating asset.
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taking a look at a house (property in general), and looking at the net value at the end of the finance period, it will have increased (hopefully - but generally this is the case, and i'm not really accounting for inflation, etc). this is - as i understand it - called an appreciating asset. so the sums we should be doing should be taking all this stuff into account.
I disagree. What you're saying is correct, except for the bit which I highlighted in bold.
If the question you're asking yourself is "should I buy a house or should I buy a car?" or "how much debt can I afford for buying a car?" or "how much debt can I afford for buying a house?" then I'd agree with the bold section.
But the scenario here is that you already have a house, a car and debt on both. In other words, you have the following:
1. a depreciating asset
2. an appreciating asset
3. high interest debt
4. low interest debt
5. a lump sum of money
6. a nagging question as to which of the two loans to put it into
Nothing you can do with that money is going to change the fact that your depreciating asset is depreciating. You can put the money anywhere you want, if you do the sums of how much your depreciating asset will have depreciated after n months, the answer will remain exactly the same. But, if you put the money into your low interest loan (mortgage), you will pay less of the low interest in future. Conversely, f you put it into your high interest loan (car loan), you will pay less of the high interest in future.
That's what you want, paying less of the high interest. Thus, if you're not buying a new amp with your money but intend to save it, there is only one logical place to put it, in the facility you have with the highest interest rate.
By the way, if you happen to have a savings account or investment account on which you earn a higher interest rate than you pay on your highest interest rate debt (as if that's ever going to happen), then your best bet is to put the money in your savings account. It means that the penalty you pay for not putting the money into your debt is less than the benefit you earn for putting the money in savings.
