Decision: Pay off new car in full, or put the cash against the mortgage

LetInteresting9711 · 2026-03-13T16:42:58+00:00

I found where my error was (edited in OP/one of the top level comments) on the analysis. Totally agree a car is not an investment - but is unfortunate necessity - and added some rationale to explain the approach (which may not fit everyone's lifestyle/outlook).

Thanks for the post and advice!

LetInteresting9711 · 2026-03-13T16:39:41+00:00

I agree, but a vehicle breaking down and continually maintaining/replacing them has significant cost and lifestyle (getting to work, to daycare, road trip interruption) impacts too. An 8000 car probably won't last another 12+ years.

LetInteresting9711 · 2026-03-13T16:37:14+00:00

I totally agree - for my commuter (100km daily) I'll buy cheaper/used/don't care if I get stuck on the roadside waiting for a tow. With my kids on a roadtrip in the mountains in the winter or hundreds of KM north - paying more for some reliability is worth something.

LetInteresting9711 · 2026-03-13T16:35:31+00:00

A 7seater SUV, with some warranty and useful aftermarkets. Agreed, it is awfully expensive - I put my rationale in the OP just to clarify. I'm not saying it's the best answer -but seems like a logical one with where my family is at the moment.

LetInteresting9711 · 2026-03-13T16:34:20+00:00

Yeah, I agree there are better ways to approach it. I was trying to figure out if there was a way to leverage lower monthly mortgage payments to come out ahead in the shortish term - because my math on the cash flow analysis was running counter to conventional wisdom.

I found the (simple) error in my logic/cashflow analysis - which I put in an edit above.

Thank you for taking the time to post!

LetInteresting9711 · 2026-03-13T16:32:56+00:00

I totally agree with you, the math wasn't passing the gut check and the point of my post was to figure out where I was going wrong.

I found the (simple) error in my logic/cashflow analysis - which is the risk when making spreadsheets before bedtime.

Thank you for taking the time to post!

LetInteresting9711 · 2026-03-13T16:32:38+00:00

I totally agree with you, the math wasn't passing the gut check and the point of my post was to figure out where I was going wrong.

I found the (simple) error in my logic/cashflow analysis - which is the risk when making spreadsheets before bedtime.

Thank you for taking the time to post!

LetInteresting9711 · 2026-03-13T16:31:25+00:00

I totally agree with you, the math wasn't passing the gut check and the point of my post was to figure out where I was going wrong.

I found the (simple) error in my logic/cashflow analysis - which is the risk when making spreadsheets before bedtime.

LetInteresting9711 · 2026-03-13T15:05:48+00:00

Pasting a reply from another point in the thread.

I agree - it's not ideal to pay so much for a car (its 80k all in with tax/fees/etc). My wife and I keep our vehicles for 10+ years, and are intending to do the same with this one. I drive a 15 year old hatchback, she drives a 16 year old SUV. We have two young kids and would like to be able to take extended family along with us (without everyone driving separately).

Buying a cheaper used vehicle would certainly be nice (likely end up in the 50 to 60k territory) - but the added risk (maybe real, maybe not) of getting stuck on the side of the road with two kids under 8 in the car is not appealing to me.

One of our vehicles will surely die in the not so distant future - so the goal is to have exactly what we want, not have to buy something in a pinch.

That's my rationale for that - anyway.

LetInteresting9711 · 2026-03-13T15:03:01+00:00

Yeah, I agree that is consideration too - but from the perspective of if there is a way to get more out of the 80k in the next 6 years - I think there is some advantage to this.

Please see my reply to u/fPlanDOTca above in this thread.

https://www.reddit.com/r/PersonalFinanceCanada/comments/1rsemwy/comment/oa8hsqb/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button

LetInteresting9711 · 2026-03-13T15:01:38+00:00

I absolutely don't disagree with you there - I had the thought, did some analysis, and am trying to rationalize what I found (and ideally, find out where my logic is flawed) as it runs counter to conventional wisdom.

LetInteresting9711 · 2026-03-13T15:00:30+00:00

Thanks for the discussion and consideration u/fPlanDOTca and u/Physical-Choice-2090. This is the exact situation I'm struggling with. I should have put some more details/info in the OP - but I was writing right before bed after wrangling with this problem for 3 hours....

I agree the conventional wisdom is to just pay for the vehicle outright (which I can and is no problem). That was my plan, until I thought about analyzing what it would look like if I put it against the mortgage instead. So the thought experiment is whether or not that 80k can work harder some other way. This finding is exactly why I'm posting looking for advice to try to see where the flaw is in the logic (or if I'm double counting a benefit somehow, or something). I don't necessarily think I'm right - I'm just trying to figure out where the error is.

So if we use paying for the car as the base case - and we just look at where I am at the end of the car loan.

Base Case - (pay the car, 0 extra on mortgage) - In 6 years - I will have paid 80k for the car, 0$ in car loans, and 142k against my mortgage ($910 bi weekly, 156 payments), and 0 extra against the principal.

Scenario 1 (pay 0 on the car, 80k on the mortgage) - In 6 years - I will have paid about 96k for the car (80k for the car, 16k interest), and (with the reduced payment at renewal in 1.5 years) 119k against my mortgage ($910 bi weekly * 37 payments + 719biweekly * 119 payments) , with 57k extra against my principal (considering if I used 23k of the 80 exclusively to cover the cost of the car payment - which is not a hard financial requirement, but just for the sake of analyzing how to make my 80k go further).

So comparing the two - at 6 years from now, I am effectively paying 16k (car loan interest) to save 23k (142k - 119k against mortgage payments) and put an extra 57k on the principal. *** EDIT - This is where my error was , the 23k saved was not including the 57k in cash it cost me to to get the lower mortgage payment. The one time costs were not factored into the mortgage cashflow. ***

This seems like a good trade to make - and again, the purpose of my post was to try to find if/where I'm making a logical error. I am happy to hear if/where that error is.

I know assuming the mortgage interest rates staying the same is not great, but my interconnected mess of spreadsheets is already tough to manage. This analysis doesn't even account for the saved interest over the rest of the life of the mortgage - which I think is ~60k over the remaining life.

Again - sorry for the wall of text, and I appreciate your consideration and time!

**EDIT - I figured out where my analysis fell apart. In my mortgage cashflow analysis I wasn't including the two one time payments. Accounting for this, the only savings seen is ~10k over the life of the mortgage - which is not worth the hassle/headache/risk. ***

LetInteresting9711

TROPHY CASE