The Real Cost of Adding a Car to Your Mortgage
From Aaron’s YouTube: “Mortgage Cost For This Car #newzealand #firsthome #kiwisaver ##nzfirsthome #nzmortgage #homeloan”
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Posted 21 April 2025
The short version
- A $175,000 car added to your mortgage costs an extra $215/week at current rates.
- Over 30 years, you'll pay significantly more than the car's sticker price in interest.
- Some luxury cars you see may be financed against property rather than through car loans.
- This approach is generally not recommended for personal vehicles due to long-term costs.
The weekly hit doesn't tell the full story
At first glance, $215 per week might seem manageable for someone wanting to drive a $175,000 BMW X3. But mortgage adviser Aaron breaks down why this approach to car financing is more expensive than it appears. Unlike traditional car loans that might run for 5-7 years, you're stretching this purchase over your entire 30-year mortgage term.
The real cost comes from compound interest - you're not just paying interest on the car for the few years you own it, but potentially for decades. What looks like an affordable weekly payment adds up to a massive premium on the vehicle's actual price.
Why some still do it (and why you shouldn't)
Aaron notes that some high-end vehicles like Lamborghinis are sometimes financed against property rather than through traditional car loans. This approach might make sense for business assets or appreciating collector cars, but rarely for personal daily drivers.
For most Kiwis, treating your mortgage like an ATM for depreciating assets is a financial misstep. The flexibility of mortgage financing can be tempting, but you'll ultimately pay far more than simpler car finance options - money that could be going toward your home equity instead.
Better alternatives for car financing
If you're considering this approach, talk to a mortgage adviser about why separate car financing usually makes more sense. Keeping short-term liabilities like vehicles separate from your 30-year home loan protects your mortgage's efficiency.
Aaron suggests calculating the total interest cost over the full loan term before making this decision. That flash car might seem affordable at $215/week, but the long-term math often reveals a sobering picture of what you're really paying.
This is general information, not personalised financial advice. For advice on your situation, talk to Aaron.
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