Matthew is refinancing his property @ 4.2%. He will have an extra $100k. So he is planning to buy a $100k car too. The car loan is offering him 2.88%. Should Matthew use his home loan to buy this car or should Matthew take the car loan ? The answer, contradict to common comments, is actually home loan but . . . Assumption : 7 years loan Reason 1 If you take home loan approach, your monthly repayment is $1,376.11 If you take car loan approach, your monthly repayment is $1,430.48 You will have a better CASH FLOW with the home loan approach. You pay less. Reason 2 If you take home loan approach, you have paid a total of $115,593 after 7 years If you take car loan approach, you have paid a total of $120,160 after 7 years You save a total of $4,567 with the home loan approach. So either way you analysis the comparison, it is BETTER to use the home loan to buy the car instead of getting the car loan. WHY ? How can this be possible ? How can 2.88% worst than 4.2% !?!? The answer is all